Pension Advisory Committees in Ontario

Effective January 1, 2017, Ontario regulations were modified to make the formation of Pension Advisory Committees (PAC) more accessible for members of any pension plan registered in that province that does not already have member representation within its governance structure. 

In particular: 

• So long as a pension plan has 50 or more members, the Plan administrator must provide information and organize a vote for plan members to choose to form a PAC within 90 days once a request is made:
  • y 10 or more plan members, including active and/or retired members, or
  • By a union if it represents 10 or more plan members
• The information to be provided must include the purposes of the PAC and any information prepared by the group or union that requested the vote.
• A simple majority within active and/or retired members that cast a positive vote suffices to move forward with the creation of a PAC.
• A PAC may have between 4 and 15 members, selected from active, retired or former members of the Plan. Each class of employees (i.e. salaried, hourly, management, etc.) is entitled to have at least one representative, while retirees are entitled to appoint at least two representatives and former members are entitled to appoint at least one.
• The purpose of a PAC is to monitor and make recommendations with respect to the plan’s administration, and to promote awareness and understanding from plan members. As such, a PAC has an advisory role only: it does not replace or supersede the Plan administrator, who is not required to act on the PAC’s recommendations.
• The PAC is entitled to meet twice a year with the Plan administrator and once a year with both the Plan’s actuary and with someone who can report on the Plan’s investments.
• The Plan administrator is required to provide administrative assistance for the PAC to distribute an annual report about its activities to all plan members.
• Reasonable costs for the PAC’s establishment and ongoing operation may be paid directly from the pension fund.

Though Ontario regulations have long allowed advisory committees to exist, few were actually formed and some lacked access to relevant plan information. Present regulations are much more prescriptive and impose a duty of cooperation from Plan sponsors.

Unions not already involved in their pension plan’s governance (as trustees) may now find it easier to gain access to information for the benefit of their members and to keep a closer eye on the ongoing administration and welfare of their pension plan. Forming a PAC is now easier than ever before in Ontario – easier than it is in most other provinces as well. For pension plan members, this can only be a positive development. Time will tell whether they choose to take advantage of it.