Minutes of the 1999 Consultation Session

1. Opening remarks and Consultation Process
2. 1998 Focus Group Results
3. Report on the Division
   • Report from the Client Services Section (CSS)
   • Report from the Policy & Systems Section (PSS)
   • Report from the Actuarial Advice Section (AAS)
   • Report from the Technical Services Section (TSS)
   • Report from the Audit Section (AS)
   • Reporting - Assessment and Collections Branch (ACB)
4. Finance Issues
5. Technical Questions/Answers
6. Electronic filing
7. Closing comments

1. Opening remarks and Consultation Process

The Director of the Registered Plans Division (RPD), Mr. Bob D'Aurelio, welcomed all participants. All of the participants introduced themselves after which the Director reviewed the day's agenda.

The Director explained the method used to select participants for this year's Consultative Group. To ensure a broader consultative process, RPD decided to include other organizations, taking into account such factors as the nature of issues raised, volume of business, as well as geographical representation. The Director confirmed RPD's intention of maintaining a working relationship with the Pension Review Committee (PRC) via comments to draft publications.

The Director asked for comments relating to the Consultation Process. Several members commended RPD's initiative with respect to the Consultative Process. However, one participant talked about the time it takes to resolve issues (i.e. acceptance of plan amendments, delivery of timely publications, development of policies, etc.). The Director indicated that RPD recognizes this limitation. He indicated Managers would provide comments on this issue in their presentations.

The Director confirmed RPD's intention to solicit the participation of some members of this Consultative Group to comment on draft publications. He reiterated that the PRC were also welcomed to submit their comments as a group.

The Director briefly summarized the 1998 Focus Group Results. The results generally indicate an improvement of RPD's service. Some of the initiatives undertaken this year to improve RPD's service are : a new training program for all employees (technical as well as technological programs), providing more information to our clients (FAQs and publications via our Website), targeting of audits, addressing client's concerns and establishing better lines of communication within the Division. The Director indicated that Managers would comment on some of these issues in their presentations.

The Director asked if there were any comments about this process.

A participant stated that his clients were concerned with the time it takes to approve plan amendments. The Director indicated that RPD is also concerned with this issue and indicated that the Division had received an increase in its base resources of twenty staff. One participant suggested that a structured forum (i.e. getting more focus group feedback in writing from participants versus bringing together a group of individuals) should be envisioned. The Director acknowledged this point and stated that further consideration would be given to this.

Ms Annelisa Richardson, Chief of CSS reported that the RESP program, training programs, staff attrition, Y2K issues, as well as change to Agency status were all contributing factors that affected the registration/approval of amendments to RPPs.

The Chief of CSS distributed an organizational chart of her section explaining the roles and responsibilities of each group. She explained that to provide a better service to our clients, general enquiries (i.e. not file related) should be addressed to the general enquiries groups, while case specific queries should indicate the appropriate file number and be addressed to the specialty group. It was also suggested that if clients were to provide what they believe the appropriate application of the ITA may be as the answer to their general enquiries (i.e. provide a recommendation to the question posed), this would reduce delays in responding.

The Chief of CSS noted that they had recently received approval for 20 additional employees. She indicated that CSS is comprised of 77 employees (compared to 88 last year) with an inventory of 16,500 submissions (an increase of about 1,000 from last year). 50% of written enquiries are answered within 60 days (down from past years where response was closer to 70%). 90% of submissions relating to new plan registration are dealt within 6 months; terminations were dealt with 80% of the time within 1 year, while the average turnaround time for amendments was 300 calendar days. Ms Richardson indicated that she was very concerned with this and that RPD would focus their attention on this matter.

Mr. Pierre Cloutier, Chief of PSS reported that PSS has in the last year taken on additional responsibilities with respect to other deferred income plans (RRSPs, RESPs, RRIFs, DPSPs, SUBPs and RIs). The RESP program has received a higher than expected response from the public. PSS has participated in the policy development of legislation relating to RESPs as well as working in close relation with the Canadian Education Savings Grant (CESG) program of Human Resources Development Canada (HRDC). PSS is also responsible for the RPD training program; 15 different technical workshops are being given to staff.

PSS accomplishments of the past year include the establishment of RPD's Website, co-operation with the Department of Finance in the review of explanatory notes to proposed legislation on PAR regulations, publication of the PAR and PSPA Guides, successful negotiation of Memoranda of Understanding (MOUs) with the Government of Newfoundland and OSFI regarding the harmonization of Annual Information Returns (AIR).

A participant suggested that tentative policy issue papers could be circulated to the trade for comment. The Chief of PSS indicated that because of the nature of our work, there are limitations imposed on the information that we can or cannot disseminate.

PSS's goals for the upcoming year include revisions to various Newsletters (Flex Plan, Commutation, Specimens) and to guides (Registering your Pension Plan Guide, SUBP Guide, RRIF and RESP Circulars), publication of a newsletter on transfers, harmonization of the AIR with the Government of Quebec, harmonization of the actuarial information summary, enhancements to our Internet Website and better electronic links with HRDC as well as with our clients.

A participant asked if consideration was being given to revising the foreign service Newsletter. Mr. Cloutier indicated that the Department of Finance is presently looking at the issue.

Mr. John O'Meara, Chief of AAS discussed AAS's resources. The section presently has a staff of 9 : 1 Manager, 2 actuaries, 5 analysts and 1 clerical assistant. AAS has gone through a high level of attrition since last year. AAS has recently hired a new actuary who will commence in January 2000; they are also looking to hire another.

AAS's objectives and goals for the upcoming year include providing actuarial advice on funding and transfers on a timely basis, responding to client enquiries on actuarial matters, providing actuarial analysis of proposals from Finance, PBSA and the PBAs as well as development of actuarial policies.

AAS is also looking at integrating the actuarial valuation report approval process directly with the CSS amendment process, which should speed up responses to the client as well as improve efficiencies within the Division.

Mr. Mike Godwin, Chief of TSS described TSS resources as well as its mandate. The section is presently made up of 1 Manager and 5 Technical Advisors. TSS's mandate is described as threefold : provide technical support to the Division, deal with politically sensitive issues and liaise with RPD general enquiries group on waivers and issues of ministerial discretion.

In addition, TSS liaises with Rulings as well as Legal Services on a variety of issues, provides comments on new plan designs in the current framework of the legislation, handles ministerial correspondence that deal with pension matters, prepares briefing notes for on issues that RPD feels the Minister, Commissioner or Assistant Commissioner might need to be made aware of and prepares issue sheets and Q&As on behalf of the for the Minister for question periodon issues that the Minister may get called upon.

With regards to the future direction of the section, TSS is trying to implement a random quality review of submissions handled by CSS, as well as taking a more active role in the training of staff.

A participant asked if TSS would considerwas considering publishing a summary of the waivers that had been granted. The Chief of TSS stated that although ministerial discretion may not fit all cases, consideration wcould be given to the possibility of including such themes on our Web site.

Mr. Phil Kohnen, Chief of AS provided a general overview of the section's accomplishments. Training courses have been designed and provided to field auditors to increase their working knowledge on pension plan matters; as well, customized training plans have been developed with most section members to upgrade their technical abilities. Information derived as a result of the section's profiling of audits was useful feedback in determining appropriate candidates for future audits.

The Chief of AS briefly talked of the partnership between the section and the Verification Enforcement Compliance Branch (VECR). VECR is responsible for the allocation of field auditor resources while the Audit section acts in a consultative role to assist field auditors on pension matters and to administer the audit program.

Desk reviews primarily focused on DB plan terminations and the results were quite positive. Further consideration is being given to expanding this program in the future to other areas such as employer contributions as well as benefits paid from on-going plans.

Mr. Ed Williams, Senior Programs Officer of ACB, briefly explained that the Individual Returns and Payment Processing Directorate (IRPPD) was responsible for the assessment of RRSP deductions for individuals, PA, PSPA, PAR and connected persons information returns (form T1007). Documentation pertaining to the filing of PSPAs, PARs and Connected Persons Information Returns was distributed.

Two common reporting problems were discussed. The first deals with late filing penalties that are triggered as a result of filing form T1007 together with form T510 (Application for Registration of an RPP). Form T1007 states that the return must be filed no later than 60 days after the connected person becomes a member of the plan. With respect to these situations, ACB had recent discussions with RPD regarding what date should be entered in the field "date the individual became a member of the plan" of Area I of the form. The date should be the later of the following dates: 1) effective date of the plan, 2) date that the plan is submitted for registration and 3) date that the connected person became a member of the plan.

The second relates to the determination of past service event dates. IRPPD has noted quite a number of cases being reassessed as a result of errors made in the determination of past service events; he suggested that when in doubt to contact RPD. He also noted the importance of providing the name and phone number of a contact person on the various forms.

Another reporting issue raised was the situation where an original return (PSPA, PAR) has been filed and it is discovered a few days later that a calculation error has occurred. Plan administrators should allow a few weeks to submit an amended return as it is quite possible that the amended return might be treated before the original return.

PAR reporting procedures were also discussed. It was confirmed that plan administrators can provide CCRA with a listing of PARs instead of the actual forms, subject to the 5 conditions outlined in the draft PAR reporting letter. This procedure will also apply to the filing of PSPAs and exempt PSPAs.

PSPAs and Connected Information Returns are as of this year processed through the Ottawa Technology Centre.

A participant asked how PARs should be determined in cases where PAs were incorrectly reported. PARs should be calculated on the basis of amended PAs. Electronic filing of PSPAs and PARs was also discussed. Mr. Williams confirmed that electronic filing was not yet an option (possibly in 2003).

Mr. Dave Wurtele of the Department of Finance highlighted some of the pension-related projects that Finance has been involved with since last year's meeting: enactment of PAR regulations, release of CCRA's proportionality newsletter, CAPSA position paper on flexible pension plans and November 30, 1999 release of draft technical income tax amendments (Finance Canada News Release 99-102) which includes 4 pension-related amendments.

Finance noted that significant progress has been made on a package of technical amendments to the pension regulations. It is expected that a consultation draft will be released in early 2000. Some of the amendments that Finance will be recommending include:

• SMEP termination/death benefit equal to employee and employer contributions.
• New exceptions to the equal periodic rule:
  • reduce or eliminate early retirement reduction but only to the extent that the reduction was not required under ITR 8503(3)(c);
  • eliminate offset for public disability benefits, workers' compensation, or accident, sickness or disability insurance benefits;
  • reduce or eliminate a joint and survivor reduction where survivor pension will not be paid (e.g. spouse dies or marriage breakdown);
  • re-determination to provide spousal pension (to accommodate marriage after pension commencement);
  • partial payment of pension on re-employment or postponed retirement to reflect remuneration; and
  • future increases to pension-in-pay set out in plan terms.
• Changes to allow crediting of interest on delayed commutation of defined benefits.
• Changes to bridging benefit rules to accommodate Quebec's provisions relating to temporary pensions:
  • allow additional bridging benefit up to 40% of YMPE on actuarial equivalent basis;
  • allow member to give-up all LRBs in exchange for bridging benefit;
  • allow spousal bridging benefits;
• Special interpretative rule to ensure that where two spouses participated in same plan, one spouse's entitlement to a surviving spousal pension has no impact on his or her regular pension (relevant for ITR 8503(3)(b), 8504, PAR).

Finance indicated that there has been no progress on drafting amendments to deal with self-insured money purchase plans or to codify the foreign service newsletter. However, they are actively considering increasing the three-year limit on foreign service to at least five years.

The Director explained that RPD had solicited technical questions prior to the Consultation Session. A variety of questions were submitted. After eliminating duplicates and others which were too specific for this forum, 18 were dealt with at the session. Section Chiefs read and provided verbal responses to each question. The Director indicated that a response would be provided to all questions submitted by participants. Attached is a document containing the questions and answers provided by the Section Chiefs.

The Chief of PSS briefly discussed developing standards applicable to the filing of RRSP listings via electronic media.

The Chief of PSS talked of two major initiatives for the future: improvement of the Division's document management capabilities and of its research data base (ex. ability to research precedents, keeping track of our correspondence, etc.). The Division's ultimate objective for the future is to receive submissions from its clients in electronic format.

The Director thanked the participants for taking time to participate in this year's consultation. The group indicated that the meeting had been very successful and, in particular, appreciated the re-institution of the question and answer period.

The Chief of PSS briefly discussed RPD's progress relating to electronic filing. With regards to RRSPs, RPD is in the process of developing standards applicable to the filing of RRSP listings via electronic medias; with regards to RPPs, no progress has yet developed.

The Chief of PSS talked of two major initiatives for the upcoming year : improvement of the Division's document management capabilities and of its research data base (ex. ability to research precedents, keeping track of our correspondence, etc...). The Division's ultimate objective for the future is to receive submissions from its clients in electronic format.

The Director indicated that serious consideration is being given to the application of charging fees. He added that this approach is applied by other regulators and constitutes part of the Agency's mandate.. It was suggested that in light of the Division's volume, minimal charging fees would most likely be levied. He added that this is still in its infancy stage and that a formal consultation process would be undertaken.