A legal lost and found: proposed rules for New Brunswick’s Unclaimed Property Act now published
As detailed in our previous update , in March 2020 New Brunswick implemented the Unclaimed Property Act (“Act”), with the intention that the New Brunswick Financial and Consumer Services Commission (“FCNB”) would use its authority under the Act to develop new regulatory rules for the administration of unclaimed monetary property. This came to pass on October 21, 2021 when the FCNB provided notice that it had adopted two rules under the Act; the General Rule and the Fees Rule (collectively, the “Rules”). FCNB expects the regime to come into force on January 1, 2022, with the first reporting period occurring in January 2023.
Administrators of wound-up pension plans should pay particular attention to the adoption of the Rules, as they will, when in force, provide a more efficient way to dispose of unclaimed benefits owed to unlocatable members. At this time, the regime only applies to the assets of wound-up pension plans subject to New Brunswick law, which means that ongoing pension plans and pension plans in certain federally-regulated industries will not be affected. It is also noteworthy that plan administrators will be exempted from obligations under the new regime if the total fair market value of the property held is below $1,000.
When is property considered unclaimed?
The Rules state that, in most cases, monetary property will be presumed unclaimed if the apparent owner does not claim from or notify the property holder of their right or interest in the property for three years. The Rules also provide that once the director, appointed by the FCNB (“Director”), has received any unclaimed property, it will be added to the online public inventory for unclaimed property, which the Director will maintain. With respect to pension benefits, the three-year period begins when the wind-up report is approved. This period ends if the beneficiary explicitly indicates their interest in the benefit, or on the occurrence of other events, such as the administrator of a wound-up plan successfully delivering a statement to the apparent beneficiary, or the apparent beneficiary logging into an online account relating to the funds.
Rights and duties of administrators
The Rules also set out several rights and duties of holders of unclaimed property, including administrators of wound-up pension plans. Several examples are as follows:
- Property holders must try to notify the apparent owner or beneficiary of property by mail or email, if they have any of the owner’s addresses on record, prior to transferring the property to the Director. With respect to wound-up pension plans, this attempt must take place during, or near, the last quarter of the year of the third anniversary of the wind-up;
- Anyone holding unclaimed property on December 31 of any year, has ninety days from that date to submit the property to the Director, with a report that details information about the property and its apparent owner. Property holders can apply to deliver the property before the three-year period has lapsed, which requires the payment of an application fee;
- The Director has the authority to demand delivery of unclaimed property, backed by certain investigatory powers, in case property holders fail to cooperate. There are also provisions for late delivery with the Director’s permission and payment of an application fee;
- Interest fees on late transfers may apply, up to a $1,000 maximum; and
- Delivering unclaimed property to the Director in compliance with the Act discharges the holder from all liability in respect of the property.
Though the Rules are being adopted, the Canadian Association of Pension Supervisory Authorities’ 2019 Guideline on Searching for Unlocatable Members remains a valuable resource for plan administrators to consult, as it suggests best practices that remain valuable under the Rules. For example, it advises that administrators should periodically remind plan participants to update their contact information if it changes.
How the Rules will be implemented, or what the practice will look like under this regime is still unknown, but soon to be seen. Of particular interest is whether the Rules will ever be amended to include assets of active pension plans, which has been discussed. As always, time will tell.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Pensions and Benefits group.
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