Plan administrators are welcoming the increased clarity accompanying the amendment of Ontario’s Pension Benefits Act to allow for the electronic designation of beneficiaries and the re-issue of the Canadian Association of Pension Supervisory Authorities’ guideline No. 2, which establishes best practices for electronic communications in the pension industry.
“Clarity on the ability to designate beneficiaries electronically will be very helpful to both plan administrators and members in Ontario,” said Dani Goraichy, vice-president of actuarial services at the OPSEU Pension Trust, and Louise Greig, the pension fund’s associate general counsel, in an email to Benefits Canada. “In our experience, the ability to change personal information online increases the likelihood that members will keep their information current.”
Before Dec. 6, 2018, when this section of the PBA came into force, some uncertainty existed as to whether electronic designation was legal. “Many plan administrators were doing it, but the amendment provides needed and significant comfort in our complicated and complex system of regulation where fiduciaries have high standards,” says Glorie Alfred, an associate in pension and benefits at Osler, Hoskin & Harcourt LLP.
Although the PBA amendments require only that administrators comply with not-as-yet released “prescribed requirements” respecting electronic designation, further guidance became available in early May with the re-issue of the CAPSA’s guideline No. 2.
While the guideline doesn’t address electronic beneficiary designations directly, it does offer new or updated guidance concerning electronic signatures; data protection and security; administrators’ role in protecting confidential information; consent to receiving electronic communications; and the use of website and other electronic technology to provide information required by law.
“We are operating on the assumption that the best practices set out in guideline No. 2 would apply to any communications by plan administrators to members including the electronic environment used for purposes of electronic beneficiary designations,” noted Goraichy and Greig. “We defer to the government on whether additional requirements are necessary at this time.”
As it turns out, the industry seems to be ahead of the curve. “We, and most other pension plans, currently communicate with members electronically beyond minimum regulatory requirements and offer a variety of self-service options to them,” wrote the OPTrust. “In doing so, we already use many state-of-the-art safeguards and employ penetration testing to reduce the risk of cyber-security attacks.”
The upshot is the changes won’t significantly increase costs or administrative burdens. “Incorporating electronic beneficiary designations is just part of the ongoing costs involved in setting up a secure system and ensuring that it continues to meet cyber-security and other requirements,” noted Goraichy and Greig.
And from all appearances, the evolution of electronic communications for the industry is likely to continue.
“What’s notable is that the CAPSA guideline encourages jurisdictions that have not already done so to adopt legislation permitting electronic communications ‘as a default form of communication [with requisite safeguards]’ or to at least recognize ‘deemed consent,’” says Alfred.