Canada: Electronic Communications - A Key Tool For Compliance With Disclosure Obligations For Ontario Plan Administrators Amidst COVID-19 Business Disruption

The ongoing COVID-19 pandemic continues to cause significant business disruption across all sectors of our society.  Pension plan administrators are not immune to this disruption.  During this challenging time, administrators must continue to administer pension plans in keeping with their fiduciary duties, legislative requirements and regulatory rules, subject to any specific relief measures that have been implemented in response to the COVID-19 pandemic.  One key plan administration activity that has been impacted by the pandemic is the administrator's ability to comply with provisions of the Pension Benefits Act (Ontario) and the regulations thereunder (the "PBA") or rules of the Financial Services Regulatory Authority of Ontario ("FSRA") which require the delivery of certain documents to plan members or other persons within prescribed timelines (the "Prescribed Documents").

On December 10, 2019, sections 30.1 and 112 of the PBA were amended to include new provisions pertaining to the electronic delivery of Prescribed Documents (the "Amendment"). We provided an overview of the Amendment in an earlier blog post summarizing amendments to the PBA on December 19, 2019.  The Amendment constitutes a major step towards normalizing the use of electronic communications in Ontario's pension industry.  In addition, it provides administrators with a key tool for achieving compliance with prescribed disclosure obligations at a time when they, or their agents, may not have access to the adequate number of staff and/or physical premises that are required to prepare and deliver hard copies of Prescribed Documents by mail.

Requirements for electronic delivery of Prescribed Documents in Ontario

Prior to the Amendment, administrators in Ontario already had the ability to deliver Prescribed Documents to plan members and other persons through electronic means that complied with the Electronic Commerce Act, 2000 (Ontario).  The Amendment simplifies the framework for the electronic delivery of Prescribed Documents by outlining the requirements within sections 30.1 and 112 of the PBA.  In addition, the Amendment allows administrators to rely on deemed consent to deliver documents electronically in some circumstances. Some key considerations for administrators who intend to deliver Prescribed Documents by electronic means include the following:

• Requirement for Prior Notice of electronic delivery - Prior to providing Prescribed Documents to members or former members electronically, administrators must first comply with notice rules under the PBA, which require the administrator to send a notice by mail containing certain specified information to the member or former member's last known address (a "Prior Notice").
• Additional notice at retirement - Upon the retirement of a member or former member who received a Prior Notice, the administrator is required to provide an additional notice (a "Reminder Notice") containing specified information to the retired member by regular mail and in electronic form.
• Deemed consent - A member, former member or retired member who received a Prior Notice is deemed to have consented to electronic delivery of electronic documents on a go forward basis until the recipient of the Prior Notice instructs the administrator to stop providing Prescribed Documents electronically. Since such members may choose to stop receiving documents electronically at any time, administrators should ensure that they have a process to easily respond to such requests on short notice.
• Express consent required for some individuals - The deemed consent provisions described above do not apply to persons who retire prior to receiving a Prior Notice or other persons, who are not members or former members, to whom the administrator is required to provide Prescribed Documents (for example, spouses  or other plan beneficiaries). The administrator will be required to obtain express consent for the electronic delivery of Prescribed Documents to such persons. Alternatively, the administrator may rely on the implied consent of such persons in order to provide Prescribed Documents to them by electronic means.  However, whether implied consent exists is a fact-specific analysis that requires the administrator to consider specific factors.
• Special rules for personal or prescribed information - When sending Prescribed Documents that contain personal information or any prescribed information by electronic means, the PBA requires the administrator use electronic means that meet specific requirements.
• Monitoring for new prescribed requirements - The PBA requirements for the Prior Notice, Reminder Notice and Prescribed Documents containing personal or prescribed information also require the administrator to comply with other requirements as may be prescribed. While no additional requirements have been prescribed yet, administrators should ensure that they have implemented processes to keep them apprised of any newly prescribed applicable requirements in a timely manner.

Practical implications and relief

Ontario plan administrators who have implemented processes for the delivery of Prescribed Documents under the PBA will be well positioned to meet their legal requirements in respect of those members who have consented to receive Prescribed Documents electronically at this time.  Administrators who had not implemented a process to facilitate electronic delivery prior to the business disruption caused by the Covid-19 pandemic may face some challenges to do so now, given that they are required to deliver the Prior Notice by mail. One option to consider is the collection of express consent for the electronic delivery of Prescribed Documents orally or electronically.

Administrators who find themselves challenged to meet disclosure obligations may seek relief by contacting FSRA.  While FSRA has not extended deadlines for Prescribed Documents, FSRA has indicated that where administrators or their agents are facing challenges in complying with the prescribed timelines, they should contact FSRA as soon as possible. Where an administrator has disclosed challenges and proposed a course of action FSRA finds reasonable, FSRA has indicated that it will not impose administrative monetary penalties with respect to late member communications that are due prior to September 1, 2020, or as otherwise agreed with an administrator or its agent.¹

Summary conclusions

We anticipate that the significant disruption caused by the COVID-19 pandemic will be a driver for change that will broaden the scope of the use of electronic communications in the pension industry across Canada. Prior to the COVID-19 pandemic, there was an increased regulatory focus on electronic communications in the pension industry.  For example, in May 2019, the Canadian Association of Pension Supervisory Authorities updated Guideline No. 2 - Electronic Communication in the Pension Industry, which encouraged jurisdictions that have not already done so, to adopt legislation that permits electronic communications as a default form of communication or recognizes deemed consent.  In the meantime, administrators who intend to implement processes to facilitate the electronic delivery of Prescribed Documents in Ontario should consider the key considerations outlined above and seek advice as appropriate.  

Footnote

1 FSRA Information No. PE0200INF Effective April 24, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.