Consultation Sessions on the Reengineering
of the Registered Plans Directorate
February 18 to March 3, 2004

As part of its reengineering exercise, the Registered Plans Directorate (RPD) held consultation sessions with some of its registered pension plan (RPP) clients in Vancouver, Calgary, Toronto and Montreal, between February 18 and March 3, 2004. What follows is a summary of these sessions. Please note that we have listed the questions in yellow and included a summary of the answers and comments provided by those who attended.

Systems, electronic commerce and use of the Internet

Answers and comments on systems, electronic commerce and use of the Internet:

• They would prefer to receive information from RPD electronically. They would also like to be able to find out, from the Web site, to which employee a plan, an amendment, a question or an issue has been assigned.
• They would like RPD employees to be able to call up the electronic copy of a previously submitted amendment and talk to them about it, rather than have to request the paper file.
• RPD should have a generic email address so that clients can contact us for various types of information.
• Assuming that RPD will move towards more electronic filing, they would prefer that RPD define the industry standards and protocol for shared systems (with the input of IT experts).
• RPD should establish a secure site to transfer information and documents, similar to what banks do with their clients or the Canada Post site.
• Certification may be a problem with electronic filing. RPD will have to accept electronic signatures. Filing electronically with paper follow-up would be too much work. Clients could send a document electronically and keep signed paper copies in case there is an audit.
• All forms should be available on the Web site and should be "fillable".
• T3Ps and T244s could be provided to CRA on CD (useful for trust companies who have a lot to submit).
• Clients would like to be able to file past service pension adjustments, pension adjustment reversals and annual information returns (T244) electronically.

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Self-assessment

This would essentially allow clients to file documents without immediate review by RPD.

Answers and comments on self-assessment:

• They know which plans RPD is going to eventually approve (after requesting amendments, etc.).
• Feedback from RPD is valuable, especially with a new plan design. If they come up with new concepts, they won't go ahead with it before receiving approval from the Directorate.
• Many provincial legislators rely on self-assessment now.
• RPD could stop performing full reviews of plan documents if there is also a process similar to the advance income tax rulings.
• Some clients like the degree of comfort they get with the receipt of the RPD approval letter.
• RPD needs to provide clients with sufficient information to ensure that people are aware of what self-assessment actually means. On whom is the onus? The administrator? The third party administrator?
• This could result in an increase in non-compliance at the outset; however, the non-compliance should decrease depending upon the availability, accessibility and accuracy of information provided by RPD.
• They anticipate significant problems if RPD requests retroactive amendments at a later time. They suggested that RPD separate minor issues from significant issues and that minor issues be modified only when the plan is amended next.

Answers and comments on other forms of assistance that RPD could provide:

• Communication from RPD as to common areas of concerns would be more beneficial. RPD should contact clients early on in the process and let them know if there are any issues that need to be addressed.
• Clients also want to know where there are developments in the area of pension plans (for example further to a change in legislation).
• They suggested that RPD set-up a database of questions and answers on the Web site.
• It would be helpful if RPD employees could review draft documents.

Answers and comments on an optional fee-for-service program:

• Plan administrators would be willing to pay a fee for a binding opinion. They would be paying for a speedy response. In the cases of acquisitions, they would be willing to pay to clear things up faster, once and for all.
• The fee-for-service program would be useful for pro forma/specimen plans, new plan types, some amendments, etc.
• At least fee-for-service would give clients an option, which they don't have right now.
• Others didn't like the idea of a fee-for-service. They said that it is part of the Directorate's mandate to review documents, therefore there should be no charge.
• Something less structured than the advance tax rulings system, that could be done online, would be best.
• For a binding opinion, the expected turnaround would be a maximum of three months.
• Others mentioned that generally 30 to 60 days would be reasonable, maybe longer when RPD must go to the Income Tax Rulings Directorate or to the Department of Finance.

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Certifications of compliance

Answers and comments on certifications of compliance:

• There is already a certification of compliance on the annual information return (form T244). Is another certification really required? Seen as another layer of bureaucracy that serves no useful purpose.
• From a liability perspective, plan administrators wouldn't want to certify compliance. The plan sponsor might want to do it.
• Others said that plan administrators have to certify compliance for the provinces/the Office of the Superintendent of Financial Institutions and they have no problem doing it.
• Certifications by third party administrators may give a false impression to the administrators that things are more secure than they are (e.g., investments, etc.).
• Often certifications are signed just because they have to be signed. Administrators are not always aware of their obligations and responsibilities when they sign.
• RPD should remember that over time interpretations change. Takes too long to get issues resolved. How do you administer plans in the meantime? How can you provide certification?
• Some thought that it would work better for money purchase than for defined benefit plans.
• Consultants could certify that a document/amendment has gone through a quality review for compliance with the ITA.
• Certification could attest that the plan is being administered as registered, pension adjustment is being reported, investments are in compliance, etc. Someone relatively high in the organization should be required to certify (e.g., senior executive).
• RPD might want to better satisfy itself that a plan is compliant by performing an audit.
• RPD should address governance instead. RPD could identify areas of concerns and ask administrators to ensure these areas are in compliance. Certification should be about process (quality review, etc.) rather than a broad certification.
• Has RPD considered different certification for plans of different sizes? For smaller plans, some of the things (like investments) are outsourced. In some cases, RPD might want to send auditors to audit the procedures of the plan actuary or the third party administrator rather than to audit the plan itself.

Answers and comments about who could/should certify:

• A certification amounts to a legal opinion. Clients are not in a position to certify without a legal opinion. This is time- consuming and costly. Other participants stated that this is not necessarily a barrier.
• If a consultant signs the certification, there could be problems later if an audit indicates non-compliance.
• There should be one person who can certify all that, relying on info provided by others. The plan administrator has ultimate responsibility.
• Others said that the person who will certify may or may not be on top of all the plan activities and that RPD may need to get different parties to certify different parts of the plan administration.

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Information and education

Answers and comments on information and education:

• Emails!
• Sending responses to clients electronically (e.g., Internet, email) would be easier, faster and more efficient.
• Responses and other written information should be provided in PDF format, on Agency letterhead.
• Clients are interested in being able to register to receive email notification when something is added or changed on the Web site (if it can be done by plan type) [Now available - go to www.cra-arc.gc.ca/eservices/maillist/subscriberegistered-e.html ].
• The Régie des rentes du Québec allows clients to ask questions through their Web site. Answers are provided by email or phone the same or next day.
• Clients use the Web site mostly for forms. They have a hard time to find the information they need. The information is not well structured and could be better organized, with more hyperlinks. Site should be updated and kept up-to-date.
• RPD should hold consultations about the content on the Web site. The Alberta Web site [www.finance.gov.ab.ca/publications/pensions/index.html] is a good example; it provides names of people to contact, what's new, etc.
• RPD should publish draft policies/documents for comments and input from the industry.
• Clients are waiting for the publication of the technical manual on RPD's web site. Would go a long way to help administrators and consultants self-assess.
• All RPD policies should be published.
• Clients should be informed of changes in policy.
• RPD should publish standard wording as a guide. There was some disagreement as to the value of this. Would be useful for some issues (like what was done when the maximum retirement age was changed). There could be a problem if it becomes required, mandatory wording. Useful to the extent that it provides clients with RPD's interpretation.
• Clients would like to see checksheets, as long as they are provided as a tool and do not have to be sent in.
• Guides and other publications should be updated.
• There doesn't seem to be a lot of coordination between Finance and RPD in getting legislative changes communicated. It's good to get advance information as to what is going to come out from RPD, information about the interpretative approach RPD is going to take, etc.
• When new issues arise (the revalorisation issue, for example), answers should be shared with everyone (by FAQs, email, etc.).
• Certain RPD employees should be identified as subject matter experts on certain subjects and clients should also be able to access the 'senior people' (team leaders, technical/policy officers, etc.) to address unresolved issues. A list of the different work units, who's in charge, their responsibilities, employees' phone numbers and email addresses should also be available on the Web site.
• For consultation/information sessions, videoconferencing should be considered. Plan sponsors/administrators could possibly attend.
• RPD should automatically hold consultation/information sessions after major legislative or administrative changes (within one month).

Answers and comments on RPD's recourse mechanism:

• Recourse mechanisms available to clients need to be communicated to them. Only a few clients know about them.
• It's the responsibility of the analyst to make sure clients get the right answer, and clients shouldn't have to go through recourse mechanism.
• There is a need for an arbitration process, a panel or high-level committee for recourse. RPD needs to have a process for clients to access higher authority for clarification or review of decisions.

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Risk management

Answers and comments on risk management:

• They are interested in knowing more about RPD's risk assessment.
• Others see risk management as a tool for RPD management more than anything else, and they don't need to know about it.
• Disclosure of the risk assessments might adversely affect the quality of documents submitted with respect to low risk areas.
• Risk of an amendment could be assessed based on the information provided on page 3 of the T920 (the form might need to be revised).
• Clients might be able to make a few suggestions as to what the auditors should be looking at.
• More communication with the provincial authorities would help RPD identify certain problems that they are currently missing (i.e., if a member or former member complains to the provincial regulator).
• Publishing areas of concerns based on result of audits would be useful.
• If clients knew what RPD was going to look at, they could ensure that it is on file and they would monitor it.

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Cyclical review

Plan documents filed with RPD could be reviewed on a cyclical basis based on risk. For example, high risk plans could be reviewed annually while low risk plans could be reviewed every five years. All plans would be reviewed, even if there have been no submissions since the last review.

Answers and comments on cyclical review:

• Clients would like to be able to request a review before the end of plan's cycle.
• A more regular compliance review would help, with different types of reviews for different types of plans. It would give some comfort to the plan administrator that the plan is compliant, if RPD moves to a cyclical review.
• RPD should base the time line for the cyclical review on the nature/risk of the amendment being submitted as opposed to the type of plan.
• RPD should focus on the audit of pension administrative systems rather than on plan documents.
• For plans identified as being a lower risk, RPD might want to link its compliance review to the three-year actuarial review.
• The focus of RPD should be amendments that result in financial changes, and not be concerned with issues with no financial impact.
• Some attendees said that a letter submitted with an amendment should specify when there is a certain urgency to the review. Others say that it would end up affecting the review of documents submitted by other firms.
• If an amendment is found to be non-compliant at the time of a cyclical review a problem will arise if benefits have been paid on the basis of the amendment.
• RPD should sort the amendments submitted (minor or major) and determine whether amendments submitted need to be reviewed prior to the end of the cycle. The sorting could be done based on a list of questions on the annual information return (form T244).
• RPD needs to recognize that honest mistakes happen and that not all changes have to be retroactive .
• Statute- barring is problematic.
• It will take too long before clients find out there is a problem.

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Correcting non-compliance and penalties

Answers and comments about correcting non-compliance:

• It is seen as being very difficult for RPD to distinguish between honest and intentional mistakes. It's more likely to assume intent when dealing with an executive type plan or those "pushing the envelope". Could assume intentional if the mistake is repeated after the RPD's first notice.
• RPD should encourage voluntary disclosure of non-compliance by clients (honest mistakes).
• A better distinction would be between clients that have processes in place to minimize non-compliance and those who don't.
• If there is clear non-compliance, RPD should be able to demand a retroactive amendment.

Answers and comments about penalties:

• RPD needs to impose very severe penalties for certain things. Monetary penalties should be considered. It seems to work for Financial Services Commission of Ontario.
• Others can't see how penalties could work. It would require an appeal process. It would be difficult to prove wilful misconduct.
• The threat of revocation is often meaningless since it's very rarely applied by RPD. Penalties would be a better deterrent.
• Others said that revocation should be used more often. It hurts the plan sponsor and is not really hurting the plan members. In some cases, revocation is a good thing - benefits are not locked-in.
• The most practical hammer for non-compliance would be to move the plan to a higher risk category. Subject it to review on an annual basis, for example.
• The Directorate's focus should be on helping clients fix the problems rather than on imposing penalties.
• If they don't fix the problem within so many days, audit the plan.
• There are penalties already in place for cases where contributions are disallowed.
• If penalties are considered, the Directorate should move away from a fixed dollar amount, and instead go with percentage basis (e.g., a declining percentage based on the size of the plan).
• Administrators spend a lot of money to correct the problem. RPD should not add a fine on top of this.

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Status quo

Answers and comments on status quo:

• Clients appreciate the review of draft documents.
• The general enquiry line gives clients the ability to get on-going issues resolved quickly. Clients want more enquiry line staff to handle their calls.
• Clients appreciate when analysts call them to correct the wording of documents rather than make their requests known by letter only.
• Responses to written enquiries are very good.
• Paper guides (e.g., the pension adjustment guide) are very useful.
• The Web site works well.
• The Agency approves past service pension adjustments quite quickly.
• RPD should keep holding the fall consultation session.
• FAQs, Newsletters and anything that communicates RPD's position on issues are useful.
• The attitude of the people in the Directorate is good.
• There has been a lot of improvement in the Actuarial Division is the past year or so. Clients can phone up and ask a question rather than spend a few months exchanging letters.

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Client service standards and annual report

Answers and comments on client service standards and annual report:

• Most clients are aware of the Directorate's service standards.
• There is little interest in knowing how well RPD is meeting its standards.
• RPD priorities, client service standards and how they are met should be posted on the web site. RPD should notify clients when a service standard is unlikely to be met and why (new plan registrations at the end of the year, for example).
• Quantitative standards are better for plan administrators/sponsors as they are only dealing with their own plan(s). They want to know how long it will take before their plan documents are reviewed.
• The time it takes to reply to a submission is not as important as the quality of the reply.
• Publishing results based on audits might be useful.
• Clients are not interested in knowing how many plans are compliant. Would be more useful to know what the non-compliance issues are. Even if told there are problems with pension adjustment reporting, this information is not useful unless clients know specifically what was found. RPD should give the context, not just the numbers.
• The Régie des rentes du Québec has retained the services of an external firm to hold phone interviews on client satisfaction. If RPD does the same, some of the questions could be about courtesy and accuracy of service, level of technical expertise, whether RPD employees could justify their requests for amendments or answers, delays, cooperation, etc.

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Certified plan provider process

Clients could earn the RPD "seal of approval" by meeting specified criteria (including level of training for staff, systems and processes in place to ensure compliance, audit results, use of specimen/pro forma plan texts, etc.). The name of certified plan providers would be published and they would receive expedited service as their plans would be considered low- risk. Certification would be renewable every few years.

Answers and comments on the certified plan provider process:

• It would give plan administrators and plan sponsors (and potential clients of attendees) more comfort.
• It could be used as a governance tool. The process would probably work well in that context but would require a lot of resources from RPD. If it's only "nice to have" is it worth allocating all these resources on this, rather than to review plans?
• This process would not apply to law firms.
• Seen as just a marketing tool for consulting firms.
• Clients would need to assess their processes before applying for the certified plan provider process.
• This won't be a "make or break" issue for the big plans.
• Might be more beneficial to apply the certification to plans rather than to providers.
• It would be nice to coordinate this process with the provincial regulators.
• How often would they be reviewed? Things can change a lot in 10 years. Ten years is too long. Maybe ask every year what has changed (system or process changes).
• Information could be captured somewhere else. For example, could ask about Quality Assurance processes on form T920.
• It would be seen as a voluntary audit, and might permit administrators to have more control over the timing of an audit. The audit would be seen as less of an intrusion, and administrators may be more open to it.
• There could be the perception that non-certified plan providers do not offer proper "compliance" service.? Since this is a voluntary program, the Directorate needs to distinguish between providers not certified by choice and those that failed the certification process. Could potentially add a layer of regulations.
• Could be a problem if RPD takes too long to review a plan provider's process. RPD would have to make sure that enough resources are allocated to the certification process.
• Are there privacy issues? Could consultants invite the CRA to look at their files if it's not done in the course of a tax audit?
• Might become a liability issue for RPD if certification is used as a marketing tool.
• If the list of certified entities is not published, everybody could say that they are a certified plan provider.

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Advisory groups

Answers and comments on advisory groups:

• The Office of the Superintendent of Financial Institutions, the Régie des rentes du Québec and the Province of Alberta, have similar advisory groups and they are found to be useful.
• BC had one too but it became unworkable because the group of participants was too diverse.
• Advisory groups are seen as being very important. There is an opportunity for regulators to understand their clients' constraints, what they are going through, etc.
• Maybe split the groups between money purchase and defined benefit plans.
• Transparency is important. Those who are not part of the group have to have access to the minutes, etc.
• With advisory groups of the Financial Services Commission of Ontario, it's difficult for anyone other than the large firms to participate. The issues are different with the smaller firms.
• There is no point in setting up an advisory group unless it's a substantial issue. If it can be handled by a conference call, one time, then there is no need for an advisory group.
• They should be held on a regular basis, either annually or semi-annually.
• The advisory group would not need to meet regularly. Set up meetings on an ad hoc basis, varying from issue to issue.
• Would only RPD be able to call a meeting or would the industry representatives also be able to schedule one if they think it's required?
• The problem will be to limit it to 12 to 15 participants (more would be unworkable), and to not make it only about large firms. Regional representation is very important.
• Membership should be on a rotational basis. If the rotation is too frequent, there won't be continuity, and it won't work as well. A 3-year mandate was suggested, staggered so that not all members change at the same time.
• RPD should consider having an advisory group made up of plan sponsors. They have different issues.
• Maybe establish subgroups - specified multi-employer plans, public sector plans, etc. They have different agendas.
• Face to face meetings are better but cost is an issue for those who are not from Montreal or Toronto. It might work better by using conference calls or emails.
• The Department of Finance should be involved; they need to hear the issues raised by the industry.
• If RPD chooses to go with regional groups, if there are different points of view, problems might be difficult to reconcile.
• Big firms, small firms, administrators, consultants, insurance firms, etc. The concerns of each group might be different. The diversity of regions and of plan types would be the best criteria for the establishment of groups.

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Other suggestions/comments raised during the consultation sessions

Suggestions and comments about the enquiry line:

• The telephone enquiry line needs a subsection staffed with more experienced employees. Their work would come through referrals from the general enquiry line.
• There could be two enquiry lines - one for "simple issues" and one for "complex issues". Let the person calling determine whether it's a simple or complex issue.
• It is not necessary to get an immediate answer on the enquiry line. It's perfectly acceptable to be told that an analyst doesn't have the answer right away and has to look into it, as long as they call back within a day or two.
• If RPD wants flexibility, it might want to have more experienced employees answer calls only a few days a week and work on policy issues the rest of the week.
• When dealing with a complex issue, it might be more useful to receive a call from a more experienced employee.
• As long as enquiry line employees are well trained, they should know where to go to get information.
• Calling the enquiry line is usually a waste of time. If clients could get through to the right person, they would be able to get answers to their questions.
• RPD should institute a two-tier system where experienced employees act as support to junior employees on the enquiry line.
• Would like RPD employees to answer all deferred income plans questions, rather than the call centres. Often information provided by the Tax Services Office is wrong. Also problems with the Tax Centres.

Suggestions and comments about RPD processes/procedures/work flow:

• RPD could have two groups of analysts - one group working on routine issues, and the other working on significant issues or amendments.
• RPD needs to resolve issues right away (analysts could pick up the phone, send an email) rather than exchange letters for a year. With some provincial legislators, you can send the new version of an amendment by fax and they will review it the same day.
• The more experienced RPD employees should be assigned to either the enquiry line or the Technical Services Section.
• RPD should try to reduce the number of amendments requested when there is little or no value to the amendment.
• The Technical Services Section should deal with all "complex" enquiries. Often employees cannot justify their requests for amendments other than by a reference to the technical manual or to a decision taken by someone in the Technical Services Section.
• If an issue is going back and forth, the second time it should automatically go one level up. Often it's a case of misunderstanding, and it could be resolved with a phone call.
• It is problematic when two analysts come back with different changes to similar documents.
• Some of the information clients receive from the analyst is not very helpful or clear.
• There are still a lot of inconsistencies in RPD's reviews, especially when there are new analysts.
• RPD should stop sending a copy of all correspondence to the plan administrator. Analysts should try to resolve the issue with the consultant first.
• It is often difficult or impossible to know which analyst wrote the letter.
• RPD should publish procedures on how to fix certain problems that come up on a regular basis (for example: an employee is fired and reinstated a few years later, with full benefits, further to a grievance process or a court decision).

Suggestions and comments about RPD's priorities:

• Some participants thought that the Directorate should consider placing its most experienced people in policy-making positions and as team leaders.
• The Directorate has too many people on language training.
• Clients ask RPD to come up with a policy on a specific issue and the next publication that comes out is about something else that is not really critical.
• Issues and process changes (waivers, etc.) should be resolved within 6 months.
• Where there are acquisitions or mergers, unnecessary delays from RPD in approving amendments create problems. There is only a one-year window to complete the details. Plan administrators might need to file a lawsuit to cover themselves, while waiting for RPD's approval.
• Clients don't care how long it takes RPD to review minor amendments.
• The Directorate spends too much time writing to say that they have received requested amendments. More time should be spent actually reviewing the amendments submitted.
• RPD needs to publish a policy about the process to follow to correct mistakes (past service pension adjustment, etc.). Clients should not have to write in every time.

Suggestions and comments about risk analysis:

• Risk should be assessed by plan rather than by category or plan type.
• A plan sponsor/administrator who shops around for a consultant, changes consultants every few years, should be considered higher risk.

Suggestions and comments about compliance/audit:

• RPD could consider comparing contributions in the actuarial valuation report and in the annual information return.
• RPD should publish procedures for dealing with cases of excess contributions.
• RPD needs to publish a newsletter on automatic administrative relief (if X happens, here is the process to fix it).
• The Directorate should publish compliance problems that have been identified in audits.
• It shouldn't take 2 or 3 years to audit the termination of a pension plan. This should be done right away.
• The "audit policy" appears to have changed (e.g., final amendments must be sent within 60 days) without notification to clients.
• Alberta is waiving requests for amendments when a plan is terminated if amendments have no bearing on the plan. RPD should consider doing the same for non-financial amendments.
• If no T920 is provided with the termination amendment, it holds up everything because RPD won't even look at it.
• There is a lot of grief if there are minor inconsistencies between the plan text and the actuarial valuation report.
• There is presently a lot less "nitpicking" from most provinces than a few years ago. There hasn't been the same change at RPD.
• There is not enough knowledge training for field auditors.
• CRA is auditing pension adjustments and that sort of thing but audit of plans is rare.

Suggestions and comments about forms

• Form T920 is too long and too complicated. It should be simplified. It could be revised to allow clients to identify what the amendment relates to, through a checklist or a list of options. It could be placed in the appropriate pile amendment or category (low risk/high risk, major/minor) based on information provided on the T920.

Suggestions and comments about training and information/consultation sessions

• Industry representatives could give presentations to RPD employees on new types of plan design.
• It was suggested that the Directorate share training resources with clients in order for them to better understand what is required from them. The Directorate should offer training sessions when compliance problems are identified (e.g., past service purchase programs).

General comments and suggestions

• It's very hard to meet with RPD officials. There is a perceived general reluctance from the RPD.
• Improvement is required in the relationship between RPD and Finance. They don't meet often enough. There is more communication between Income Tax Rulings and Finance than between RPD and Finance.
• Registration numbers should be linked to risk level.
• Is there a process in place to review a file and provide photocopies of missing documents (when a client is missing documents)? The Financial Services Commission of Ontario charges for the photocopies - RPD could do the same.
• When RPD analysts change offices, their phone number should follow them.
• The windows on the envelopes are not large enough to include the contact person.
• There are size limits to registered mail. You cannot register a document if it is too heavy.
• Publications issued by the Directorate contain too much legal terminology.
• The mandate of the Directorate is to ensure tax compliance. There are a number of issues raised by RPD on a regular basis that are not tax related. The Directorate needs to focus more on its mandate.
• Clients prefer dealing with one person for all issues, unless they know that somebody else is an expert on a specific issue.

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