The Pension Investment Association of Canada has submitted its comments on the federal government’s unclaimed pension balances framework, noting the solution to the problem is the establishment of public sector agencies with a mandate to receive the balances.
The letter noted unclaimed balances are a major and growing problem for federally-regulated pension plans. While there has been some work in certain provinces, the PIAC expressed that the only long-term, viable solution to the problem is the establishment of public sector agencies with a mandate to receive the balances.
The PIAC put forward the same recommendation when it recently responded to draft guidance from the Canadian Association of Pension Supervisory Authorities on best practices for finding missing members.
The Bank of Canada is the logical choice for such an undertaking, noted the PIAC. However, it disagreed with the government’s proposal to limit participation to terminated plans. Rather, PIAC said the government should begin with a broader program, including ongoing plans. After all, keeping track of unclaimed balances contributes to higher administrative costs for such plans, the letter noted. As well, the PIAC said creating a program to only help federally-regulated plans isn’t enough; provincially-regulated plans should be included as well.
Further, in response to the government’s request for plan sponsors or administrators to help estimate the number of unclaimed pension balances and unlocatable beneficiaries in their plans, the PIAC asserted it intends to follow up on whether it can facilitate the collection of relevant information to this end.
As well, within the search process, the PIAC said it believes two years is a reasonable period for a pension plan to attempt to find a missing member. As well, with regard to who can collect the funds, the PIAC said designated survivors or their authorized representative or estates should be eligible to claim funds, should a member be unable to do so.
Finally, the PIAC noted it doesn’t believe there should be any charges or interest credited to an unclaimed balance.