Articles | March 17, 2021

New FSRA Guidance on Leading Practices for DB MEPPs

On March 16, 2021, Ontario’s Financial Services Regulatory Authority (FSRA) issued guidance outlining leading practices for governing DB multi-employer pension plans (MEPPs) in the province. The guidance, Defined Benefit Multi-Employer Pension Plans – Leading Practices, takes effect on March 18,  2021.

While the guidance doesn’t create compliance obligations, trustees of DB MEPPs should consider implementing FSRA’s recommendations and following the leading practices outlined.

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What’s in the guidance

The guidance is based on a review FSRA conducted in 2020 of 21 (out of 73) Ontario-registered DB MEPPs. Thirteen are construction industry plans. The review focused on the governance, risk-management practices and communication strategies of DB MEPPs in Ontario.

FSRA identified eight leading practices:

  • A comprehensive onboarding policy for new trustees
  • Education policies to help trustees fulfill their role as plan fiduciaries
  • A succession plan for trustees
  • Plan enrolment policies and procedures that keep members connected with their pensions
  • An investment policy that takes into account industry leading practices for investing plan assets and resolving conflicts of interest
  • A risk-management policy that integrates funding and benefit policies and outlines risks and how to mitigate or respond to them
  • Plain language communications that include to the likelihood of benefit adjustments to help members make informed decisions
  • Regular dialogue between the trustees, advisors and key stakeholders

Action items for trustees

FSRA encourages trustees to compare their current governance, risk management and communication practices to the leading practices in the guidance.

Trustees may wish to work with their professional advisors on that comparison.

FSRA recognizes that some plans may not be able to implement all of the leading practices described in the guidance.

The new guidance is a complement to other industry leading practices for funding, risk management and governance of DB MEPPs. For example, trustees should continue to follow guidelines issued by the Canadian Association of Pension Supervisory Authorities.

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