Reunited and it feels so good: pensions, benefits and New Brunswick’s Unclaimed Property Act
Each year in New Brunswick, millions of dollars sit in limbo: unpaid wages, forgotten security deposits, overpayments to debt collectors, and benefits from estates, pensions and employee benefit plans, to name a few. To address this issue, New Brunswick has become the fourth province in Canada to implement an unclaimed property regime with Bill 22, also known as the Unclaimed Property Act (“Act”), receiving Royal Assent on March 17, 2020. The Act aims to reconnect individuals with their forgotten or misplaced financial assets (“Eligible Property”) while reducing the cost, liability and uncertainty placed upon the holders of such assets, including employers and pension and employee benefits funds.
The regime operates in a manner similar to its federal counterpart, which requires banks to turn over to the Bank of Canada money found in inactive accounts of un-locatable persons. The Bank of Canada then holds the funds for a specified period.
In New Brunswick, holders of Eligible Property will be required to hold on to it for a period of time to be specified in regulations, after which the property will be presumed unclaimed. Holders of unclaimed property must then: provide notice to the last known address of the owner, and if no claim is made by the owner, report and remit the unclaimed property to the Director of Unclaimed Property (“Director”). A holder’s failure to report can result in interest and late fees. The program is also available, at the discretion of the Director, to holders on a voluntary basis.
Once the holder fulfills its duties under the Act, the holder is relieved from liability and the Director becomes the custodian of the property. The Director will maintain a searchable directory, allowing owners to identify and claim any unclaimed property held in their name. Any property that remains unclaimed may be used to assist in the administration of the program and any other consumer protection initiatives.
This is a welcomed solution to an ongoing problem for active and terminated pension plans alike. In contexts such as pension plan terminations, mandatory commencement of benefit payments and retiree or plan member deaths, an un-locatable member places a practical burden and expensive fiduciary obligation on plan administrators who need to hold on to funds and determine what to do with them, for what could be an indefinite period of time. The Act will now allow plan administrators to move any funds that belong to an un-locatable plan member and otherwise meet the requirement of the Act over to the Director.
While this is a step in the right direction, plan administrators should still consider what can be done on their end to limit potential problems associated with un-locatable persons, such as:
- Establish and implement a plan records management policy to ensure member information remains accurate (including reminders in member communications);
- Establish a missing members policy (standards for searching for members); and
- Establish procedures to address late commencement of pensions where missing persons are found.
Roles/responsibilities as well as suggested steps to be taken after an unsuccessful search are also set out in the Canadian Association of Pension Supervisory Authorities’ (CAPSA) Guideline No. 9 on Searching for Un-locatable Members of a Pension Plan.
This article is provided for general information only. If you have any questions about the above, please contact a member of our Pensions & Benefits Group.
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