While the coronavirus pandemic certainly doesn’t change pension plan sponsors’ fundamental fiduciary duty to their plan members, the crisis is creating circumstances that will test how that responsibility manifests.

Fiduciary duty arises when one party has a certain vulnerability in respect to another party, said Kenneth Burns, partner at Lawson Lundell LLP, in a webinar roundtable hosted by the Association of Canadian Pension Management on Thursday.

In a pension context, plan sponsors have a fiduciary duty to their members around such issues as investment decisions, dealings with pension regulators, complying with pension laws and communicating plan information.

“Even if we’re comfortable that certain legal concepts such as these might be largely staying the same, the occasions when these duties arise might not be the same and the way we meet the legal standards to address them might not be either,” he said. Pension plan sponsors have to consider their fiduciary duty as pension regulators make changes aimed at assisting them in the wake of the pandemic, said Burns.

“As some of our laws are modified, whether permanently or temporarily in this time of COVID-19, as our practices change and as the expectations of pension regulators change during this pandemic, the fiduciary law applies to every effort exerted to understand and react to those changes.” In one example, regulators in Ontario and Quebec are allowing plan sponsors to file off-cycle valuations to lock in pre-coronavirus funded statuses, noted Kathryn Bush, partner at Blake, Cassels and Graydon LLP, also speaking during the webinar. “I just raise the issue of, could an off-cycle valuation be challenged as not being in the best interest of plan members?

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