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5.17 Policy for WLU Pension Plan Expenses
This online version is for convenience; the official version of this policy is housed in the University Secretariat. In case of discrepancy between the online version and the official version held by the Secretariat, the official version shall prevail.
Approving Authority: Board of Governors
Original Approval Date: November 19, 2009
Date of Most Recent Review/Revision: June 2, 2020
Office of Accountability: Vice-President: Finance and Administration
Administrative Responsibility: Human Resource
1.00 Purpose
1.00 The purpose of this policy is to define the categories of usual and reasonable expenses related to the administration of the Wilfrid Laurier University Pension Plan (the “Plan”) eligible for reimbursement from the Plan subject to rules outlined in the Pension Benefits Act (Ontario) (the “PBA”), the plan text, funding/trust agreements, and as permitted by common law.
2.00 Definitions
2.01 The Ontario Pension Benefits Act (PBA): Governs most registered pension plans in Ontario. The University’s pension plans are subject to the PBA.
2.02 Funding: Payments into a pension fund which, with investment earnings on these funds, are intended to provide for benefits as they become payable.
2.03 Actuary: A professional in the pension and insurance fields responsible for assessing risks and contributions/premiums.
2.04 University Administration: Responsible for processing of entitlements, communications, filings, and monitoring contributions. Administrator: processes member contributions, undertakes regulatory filings, oversees investments, and safe-keeps plan assets
3.00 Jurisdiction/Scope
This policy applies to expenses related to the registered Plan only. Expenses arising from non-registered pension or benefits plans are not eligible under the terms of this policy.
4.00 Policy
The Plan is registered with the Financial Services Regulatory Authority of Ontario (FSRA). Payment of expenses from the Plan are subject to rules outlined in the PBA, the Plan text, funding/trust agreements, and as permitted by common law. As part of WLU’s overall pension governance, and in their role as Plan Administrator, it is important to formalize a policy outlining the guiding principles for the payment of expenses related to the administration of the registered Plan. WLU’s philosophy around the treatment of Plan expenses that will be charged to the Plan is that all such expenses must be reasonable, relate to the administration of the Plan or the administration and investment of the pension fund and not be prohibited or otherwise provided for under the documents that create and support the Plan or the pension fund or under the PBA.
4.01 Eligible Expense Categories
WLU will charge to the Plan all legitimate expenses reasonably necessary for the administration, integrity and existence of the Plan or the administration and investment of the pension fund. Based on FSRA policies, case law, and common practice, the following categories of expenses will be considered usual and reasonable and therefore will be charged to the pension fund unless the University decides to pay such expenses directly. The Office of the Vice-President Finance & Administration will be accountable for reviewing and approving expenses to be paid from the pension fund in accordance with applicable legislation and the terms of this policy.
4.01.01 Actuarial Expenses including:
a. Actuarial retainer and other actuarial services related to the administration of the Plan (benefit calculations, processing of pension split at marriage breakdown, etc)
b. Asset/Liability studies
c. Funding valuation reports
d. Inter-valuation period monitoring and forecasting
4.01.02 Plan Administration Expenses including:
a. Producing plan amendments including government filing and notice to members
b. Employee communication and education (plan booklets, information sessions, session related to retirement and the WLU Pension Plan, member consultations etc.)
c. Annual Member Statements
d. Fees to Third Party Administrator for day to day pension administration (enrolments, termination and retirement statements, pension adjustments, death statements etc.)
e. Annual Plan governance/compliance reviews
f. Audits from the regulators (e.g. cost of compiling requested data and documents)
g. Implementation of Plan Design changes (update documents, regulatory filing, member communication)
h. Costs for record retention, benefit calculation
4.01.03 Trustee/Custodial Expenses including:
a. Trustee/custody charges
b. Other trustee/custodial services including reporting, transaction charges, pension benefit payment services etc.
4.01.04 Investment Expenses including:
a. Investment Manager fees
b. Investment Manager performance assessments
c. Investment Consultants (if applicable)
d. Fund Manager Searches
4.01.05 Other Expenses including:
a. Audited Financial Statements of the Plan fund (fees from audit firm)
b. Salaries and related expenses of University staff whose job relates directly to the administration, integrity and existence of the Plan (based on the regular and ongoing percentage of time devoted to pension matters)
c. Legal or consulting fees related to legislative compliance;
d. Costs to implement governance guidelines or to strengthen existing plan or fund governance structures;
e. Continuing pension related and/or pension governance related education costs for members of the board of governors or WLU employees;
f. Fees for services provided by agents that are usual and reasonable expenses of the plan
g. Fees associated with the Pension Benefits Guarantee Fund (only in the circumstances permitted under the PBA) Fees associated with the Annual Information Return
4.02 Expenses Not Payable From the Pension Fund
a. Accounting for non-pension post-employment benefits
b. Costs associated with the administration of the non-registered Supplemental Pension Arrangement (SPA)
c. Analysis of Plan design changes that are not implemented
d. Retirement/life planning consultations/sessions (unrelated to the Plan)
e. Actuarial, consulting and legal fees to assist a plan sponsor or employer in designing the plan benefit structure;
f. Actuarial, consulting and legal fees incurred by the employer or union as part of collective agreement negotiations;
g. Expenses incurred by the employer acting in its own interests and not as a plan fiduciary;
h. Administrative penalties imposed by the CEO of FSRA;
i. Pension Plan accounting valuation report for WLU financials (required under accounting standards)
j. Pension Plan accounting audits for employer financials
4.03 GST/HST Rebates
Recovery of GST/HST on eligible expenses charged to the Plan will be administered in accordance with Canadian tax rules. Until such time that legislation permits pension plan trusts to receive GST/HST refunds directly, the University will pay the eligible expenses including the GST/HST, affecting the immediate recovery of the refundable portion of the GST/HST. The University will then charge the Plan for the net expense after GST/HST recovery and the Plan will then reimburse the University for the net eligible expense after GST/HST recovery.4.04 Roles and Accountabilities
4.04.01 Office of the Vice-President Finance & Administration:
To review and approve expenses to be paid from the pension fund in accordance with applicable legislation and the terms of this policy. To update this policy, as required, to ensure compliance with applicable legislation.
4.04.02 Service Providers (including Actuary, Third Party Administrator, Auditor etc.):
In preparing invoices, will clearly describe on the invoice the nature of the expense and will recommend payment from the pension fund, or outside of the pension fund, based on applicable legislation and the terms of this policy.
4.04.03 Pension Committee of the Board:
To establish, adopt and periodically review and amend as required an expenses policy for the Plan. Further, to regularly monitor compliance by all participants with this policy and to determine an appropriate action for non-compliance.
4.05 The PBA, the Plan text, and the funding/trust agreements (both historical and current) have always given WLU the authority to direct that all of the expenses related to the administration of the Plan and the pension fund shall be paid from the pension fund.