Administration

• Author: Ari N. Kaplan
• Profession: Partner, Koskie Minsky LLP. Faculty of Law, University of Western Ontario
• Pages: 316-383

CHAP TER 6

ADMINISTRATION

The convergence of statutory compliance and common law duties of

care resonates most fully in the area of pension plan administ ration.

This chapter describes the identity and functions of the pension plan

administ rator and the legal principles affecting the duties and st an-

dards of care owed by t he administrator and its agents to employees and

other plan stakeholders in carryi ng out the pension plan mandate.

A. INTRODUCTION

1) Identity of the Administrator

a) Who may be the administrator

The Pension Benef‌i ts Act1(t he PBA) requires that every pension plan

have an “administrator.” A pension plan that does not identify an ad-

ministrator is not elig ible for registration.2 The identity of the admin-

istrator is a matter of plan design. The PBA sets out the prescribed

person, p ersons or entity t hat may be an adm inist rator. Speci f‌i cally, an

administrator may be an employer;3 an arms-length “pension commit-

1 R.S.O. 1990, c. P.8.

2PBA, s. 8(1).

3Ibid., s. 8(1)(a). If there is more than one employer, the a dministrator may be

one or more of those employers.

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Administration 317

tee” comprised of employer and employee representatives4 or just em-

ployee represent atives;5 an insurance company;6 a board of trustee s;7 a

statutor y corpor ation, boa rd, agency or commis sion;8 where the plan

is being wound up, a person appointed by the Superintendent;9 or any

other prescribed person or entity.10

Similar, but not identical, requirements exist in other jurisdic-

tions.11 In Quebec and Manitoba, most pens ion plans registered in those

provinces with more than twenty-f‌i ve employees must b e administered

by a “pension committee” that, except in ver y limited circumstances,12

includes employee and pensioner representation.13

4 Ibid., s. 8(1)(b).

5 Ibid., s. 8(1)(c).

6 Ibid., s. 8(1)(d). If an in surance company is the adm inistrator, all the pens ion

benef‌i ts under the pe nsion plan must be guarant eed by the insurance compa ny.

See also FSCO pol icy A300-300 at 14 (May 1990).

7 Ibid., s. 8(1)(e). The admin istrator must be a board of tr ustees if the pension

plan is a multi- employer pension plan establ ished pursuant to a collective

agreement or a tr ust agreement; see below.

8 Ibid., s. 8(1)(f).

9 Ibid., s. 8(1)(g).

10 Ibid., s. 8(1)(h).

11 See, for exa mple, federal (PBSA, ss. 7–7.1).

12 In Quebec, i f a plan has fewer than 26 memb ers and benef‌i ciaries, t he employer

may take the pl ace of the pension committee. The employer sh all, for the ad-

ministr ation of the plan, have the power s, obligations, and liabilit y of a pension

committee: QSPPA, s. 149 and Regulation (respect ing the exemption of certa in

categories of pen sion plans from the applicat ion of the Supplemental Pension

Plans Act), ss. 1 & 2. In Manitoba, a p ension committee need only be e stab-

lished where the p ension plan has more than t he prescribed number of em ploy-

ees: MPBA, s. 28.1(1)(d). The Manitoba rule is not yet proc laimed into force: The

Pension Benef‌i ts Amendment Act, S.M. 2005, c. 2 (Royal Assent 19 April 2005).

13 In Quebec, a pe nsion plan must be admini stered by a pension committee

comprised of at lea st three persons, inc luding one person who is neither a

participa nt nor prohibited from receiving a loa n from the plan, one person

who is design ated by the employees in the plan at a n annual meeting or, in the

absence of such a desig nation, one employee designated a s and when provided

in the plan, a nd one person who is designated b y the pensioners and other

benef‌i ciarie s at the annual meeting or, in the ab sence of such a designation, one

employee or benef‌i c iary designated a s and when provided in the plan: QSPPA,

ss. 147–159. In Manitoba, a pen sion plan must provide for the appointment or

election of committ ee members in accordance wit h the regulations, and mu st

ensure th at at least one voting active member i s appointed or elected by the

active members, at le ast one voting non-active member is app ointed or elected

by the non-active memb ers, and one additional non-voting me mber may be

appointed or elected by t he active and non-active members: MPBA, ss. 28.1(1)(f)

PENSION LAW318

While more than one individua l can comprise the body t hat admin-

isters the plan, the legi slation contemplates the existence of only one

administrator.14 An administrator can and usually wil l delegate some

of its responsibilities to various persons or committees, including the

employer or a trade union, a professional thi rd-party admi nistrator, in-

vestment managers, consultants, and advi sors. While this may create an

agency relationship between the adm inistrator and its delegate, it does

not change the identity of the administrator for the purposes of the PBA.15

The Income Tax Act16 (t he ITA) def‌i nes the admi nistrator as the body with

“ultimate responsibi lity for the admini stration of the plan.”17

Except where permitted in writing by the Canada Revenue Agency

(CRA), the admini strator (or the majority of the persons who const itute

the administ rator) must be resident in Canada.18

b) Employee representation

In most pension plans, the administrator is usually the employer that

also sponsors t he plan. Except in very limited circumst ances, the PBA

neither provides as a right, nor requi res, employees and pensioners to

participate in t he administ ration of the plan. Employee participation in

the administration of the plan is permissive under the PBA, the right to

which derives from collective bargai ning or other contractual obligation

imposed on the plan spons or.19 Few private-sector si ngle-employer pen-

sion plans maintai ned for non-unionized employees include employ-

ees or pensioners in the plan’s administration. This can be contrasted

and 28.1(1.2). The Manitoba rule is not yet procl aimed into force: The Pension

Benef‌i ts Amendment Act, S.M. 2005, c. 2 (Royal Asse nt 19 April 2005).

14 R. v. Blair (1995), 129 D.L.R. (4th) 367 at 405 (Ont. Ct. Gen. Div.), rev’g (1993),

106 D.L.R. (4th) 1 (Ont. Prov. Ct.).

15 See “Who i s an administrator” in (1990) 1(2) Pension Bulletin 8 at 9. Accord-

ingly, where an employer appoint s itself as administ rator of the pension plan (in

accordance with PBA, s. 8(1)(a)) a nd delegates a number of day-to-d ay respon-

sibilities t o a pension committee, the comm ittee is not a “pension committe e”

administrator pursuant to PBA, s. 8(1)(b), since this would creat e two adminis-

trators and t he PBA does not contemplate “multi” admi nistrators. Instead, t he

pension commit tee is an agent of the admini strator to the extent of its delegate d

authority.

16 R.S.C. 1985, c. 1 (5th Supp.), as amended [ITA].

17 Ibid., s. 147.1(1) “administrator.”

18 Ibid ., s. 147.1(6). Also, CRA must be infor med in writing, wit hin 30 days after

the admin istrator has been const itued, of the name and addres s of the adminis-

trator or of each memb er of the body that is the ad ministrator and be noti f‌i ed of

any change in suc h information withi n 60 days after the cha nge: s. 147.1(7).

19 PB A, ss. 8(1)(b) & (e).