The Ontario government recently filed regulations under
the Pension Benefits Act (the PBA), which
implement funding changes for jointly sponsored pension plans
(JSPPs) and certain public sector plans, as well as more general
changes applicable to all defined benefit (DB) plans.
JSPPs that existed on August 24, 2010 (as listed in the
regulations) are exempt from solvency funding requirements.
However, JSPPs will still be required to determine solvency
deficiencies using the method set out in the amendments, and a
valuation report will have to be filed if a plan amendment changes
the amount of the solvency deficiency.
In exchange for this solvency funding exemption, JSPPs must
file certain statements with the regulator and provide enhanced
reporting to plan members. For example, JSPPs must include
additional information in annual statements for members, such as
informing them that their benefits are not guaranteed by the PBGF
and may be reduced on plan wind-up, the contribution rates for
employers and members could change, additional contributions are
not being made to eliminate the solvency funding shortfall, and
what the amounts of contribution rates were for the year before and
the year after the statement.
It is important to note that the regulations' JSPP solvency
funding exemption applies only to the six named JSPPs. All other
JSPPs interested in exploring solvency funding exemptions will have
to consider seeking specific exemptions.
New regulation 3.2 requires the administrator of all JSPPs to
file a statement certifying that the plan satisfies the criteria to
be a JSPP and describing how this criteria has been met. This
statement must be filed no later than the filing date of the first
plan valuation after becoming a JSPP (or the filing date of the
next plan valuation after June 1, 2011 for existing JSPPs).
Certain changes were also implemented with respect to DB plans
more generally. For valuations on or after December 31, 2012, plans
with a funding threshold below 85% (as opposed to 80%) will be
required to undertake annual valuations. (JSPPs, specified Ontario
multi-employer plans and certain other specified plans are exempt
from this provision.) In addition, as of January 1, 2012, all DB
plans must include information regarding funding levels in annual
plan member statements.
The Ontario government also filed Regulation 178/11, which sets out rules and
procedures for certain public sector plans seeking temporary
solvency funding relief through the two-stage process announced
earlier this year. (Please see our
February 14, 2011 post for further discussion of this funding
Ian McSweeney practises exclusively in the
field of pensions and employee benefits and advises clients on
pension plans, supplemental retirement arrangements, deferred
profit sharing plans and other employee and executive compensation
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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