IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8 (the “Act”), in particular sections 87 and 89;

AND IN THE MATTER OF the Xylem Canada Company Pension Plan, Registration Number 0231761.

AND IN THE MATTER OF the Pension Plan for Union Employees of the Former Ontario Malleable Iron Facility of Xylem Canada Company, Registration Number 0322214.

NOTICE OF INTENDED DECISION

TO:                  
Xylem Canada Company
1 International Drive
Rye Brook, NY 10573
USA

Attention:     
Christopher M. Logan, Director, Retirement Benefits
Matthew Pine, President & CEO

TAKE NOTICE THAT pursuant to section 87 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Head, Pension Plan Operations and Regulatory Effectiveness (the “Head”) intends to make an order to require Xylem Canada Company, to submit all outstanding regulatory filings for the Xylem Canada Company Pension Plan, Registration Number 0231761, and the Pension Plan for Union Employees of the Former Ontario Malleable Iron Facility of Xylem Canada Company, Registration Number 0322214, within ten (10) business days of the order.

Details of this intended decision are described below.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SUBSECTION 89(6) OF THE ACT. A hearing by the Tribunal about this Notice of Intended Decision may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within thirty (30) days after this Notice of Intended Decision is served on you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:       
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor
Toronto, ON
M2N 6S6
Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within thirty (30) days after this Notice of Intended Decision is served on you, an order will be issued as indicated in this Notice of Intended Decision.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca.

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22. The Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at (416) 590-7294, or toll free at 1-800-668-0128 extension 7294.

REASONS FOR INTENDED DECISION

1. Xylem Company Canada (“Xylem”) sponsors and maintains the Xylem Canada Company Pension Plan, Registration Number 0231761 (“Xylem Plan”) and the Pension Plan for Union Employees of the Former Ontario Malleable Iron Facility of Xylem Canada Company, Registration Number 0322214 (“Xylem Union Plan”) (collectively, the “Plans”) and is the administrator of the Plans.
2. For the Xylem Plan, Xylem failed to file:
   1. Annual Information Return for January 1, 2021 – December 31, 2021, which was due November 29, 2022.
   2. Actuarial Valuation Report for December 2021 – December 30, 2024, which was due November 29, 2022.
   3. Financial Statement for January 1, 2021 – December 31, 2021, which was due August 29, 2022.
   4. Investment Information Summary for January 1, 2021 – December 31, 2021, which was due August 29, 2022.
3. For the Xylem Union Plan, Xylem failed to file:
   1. Annual Information Return for January 1, 2021 – December 31, 2021, which was due November 29, 2022.
   2. Financial Statement for January 1, 2021 – December 31, 2021, which was due August 29, 2022.
   3. Investment Information Summary for January 1, 2021 – December 31, 2021, which was due August 29, 2022.
4. In phone calls with FSRA in February and June 2023, Xylem advised that it was undergoing an audit and the auditor advised that Xylem should not submit the outstanding filings until the audit is complete.
5. On September 20, 2023, the Head, Pension Plan Operations and Regulatory Effectiveness (“Head”) issued two summary administrative penalty Orders pursuant to section 108.3 of the Act, in the total amount of $175,000, against Xylem for contravening sections 14(10), 18(1) 76(4), and 77(1) of Regulation 909 made under the Act, as it relates to the Plans’ regulatory filings for the period of January 1, 2021, to December 31, 2021.
6. Xylem paid the summary administrative penalties. Xylem filed the Annual Information Returns for the Plans. The remaining 2021 filings are still outstanding. On August 29, 2023, the 2022 Financial Statement and Investment Information Summary for the Plans were due. Xylem failed to file these items.
7. On January 26, 2024, the Head sent a letter to Xylem requiring that the outstanding filings for the Plans be filed no later than February 25, 2024. Xylem did not complete the filings and did not respond to this letter.
8. Section 14(10) of Regulation 909 states that an administrator shall file each report required under this section (namely, the Actuarial Valuation Report) within nine months of the valuation date.
9. Section 76(4) of Regulation 909 states that the financial statements and the auditor’s report shall be filed within six months after each fiscal year end of the plan occurring on or after the 31st day of December 1988.
10. Section 77(1) of Regulation 909 states that the administrator of a pension plan that provides defined benefits shall file an investment information summary in a form approved by the Chief Executive Officer within six months after the fiscal year end of the plan.
11. Paragraph 1 of section 105(2) of the Act states, upon application, the CEO may extend the time limit related to the filing of documents as may be prescribed under the Act or its regulations for a maximum of 60 days. Filing extensions of 60 days were granted for the outstanding filings in which filing extensions were requested. Xylem did not submit the outstanding filings by the extended due dates.
12. Subsection 87(1) of the Act provides that, subject to section 89 of the Act, the Chief Executive Officer may make an order requiring an administrator or any other person to take or refrain from taking any action in respect of a pension plan or a pension fund if the Chief Executive Officer is of the opinion, upon reasonable and probable grounds
    1. that the pension plan or pension fund is not being administered in accordance with this Act, the regulations, the Authority rules or the pension plan;
    2. that the pension plan does not comply with this Act, the regulations and the Authority rules; or
    3. that the administrator of the pension plan, the employer or the other person is contravening a requirement of this Act, the regulations or the Authority rules.
13. Subsection 89(2) of the Act requires the Chief Executive Officer to serve notice of an intention to make an order under subsection 87(1) of the Act, together with written reasons for it, on the administrator of the pension plan and on any other person to whom the intended order is to be directed.
14. The Head is satisfied that Xylem, as administrator of the Plans, is contravening sections 14(10), 76(4), and 77(1) of Regulation 909. FSRA relies upon regulatory filings to effectively monitor and supervise pension plans and ensure that pension plans are being administered for the benefit of members. By failing to file these items, Xylem is frustrating FSRA’s ability to effectively monitor the Plans.
15. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, June 14, 2024.

Original signed by

David Bartucci
Head, Pension Plan Operations and Regulatory Effectiveness Financial Services Regulatory Authority of Ontario

By delegated authority from the Chief Executive Officer

Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.