Canada: Alberta And British Columbia Introduce Solvency Funding Relief Measures

In response to the current economic downturn, the Alberta and British Columbia governments have each recently implemented measures to respond to the significant financial pressures being faced by sponsors of defined benefit pension plans, albeit in different ways.


On February 18, 2009 the Alberta Employment Pension Plans Amendment Regulation, 2009 (A.R. 28/2009) came into force. The Regulation amends the regulations under the Alberta Employment Pension Plans Act to provide solvency funding relief for Alberta registered defined benefit plans. These regulations provide the following relief:

Single-Employer Pension Plans (SEPPs) and Multi-Unit Pension Plans (MUPPs): 3-Year Solvency Funding Moratorium

  • Administrators of SEPPs and MUPPs may, at any time before 2010, apply to the Superintendent for a moratorium suspending the employer's solvency funding obligations for a 3-year period from the review date of an actuarial valuation that is not before September 1, 2008 or after December 31, 2009.
  • Where such a moratorium is granted, the plan must adopt a schedule to amortize going concern unfunded liabilities established on or after the review date to which the application relates over 10 years, and amortize previously established unfunded liabilities over the lesser of 10 years and the remainder of the original 15-year amortization period for the unfunded liability.

Specified Multi-Employer Plans (SMEPPs): 3-Year Solvency Funding Moratorium or Extension of Existing Moratorium

  • For SMEPPs that had sought and received relief under the solvency funding moratorium introduced in 2006 and whose term ended at any time in 2008, the moratorium is automatically extended without any break until the end of 2011 on the same conditions.
  • For SMEPPs that had not yet sought relief or that had a solvency moratorium period ending after December 31, 2008, the plan's administrator may apply for a 3-year solvency funding moratorium at any time before 2012, based on an actuarial valuation with a review date not before August 31, 2008.

Any plan (SEPP, MUPP or SMEPP) that is granted consent to one of the moratoriums referred to above is also subject to the following conditions:

  • No benefit improvements can occur during the period of any approved moratorium in solvency deficiency funding.
  • After the end of the suspension period, a new valuation must be filed within 180 days for SEPPs and MUPPs and within 270 days for SMEPPs. If such valuation reveals the existence of a solvency deficiency, the deficiency must be funded over 5 years.

All Plans: Extension of Solvency Amortization Period from 5 Years to 10 Years

  • The administrator of any plan containing defined benefit provisions may apply to have the 5-year solvency funding amortization period extended to 10 years for solvency deficiencies created after August 31, 2008 and before 2010 and identified in a valuation report with a review date between September 1, 2008 and December 31, 2009. No restrictions on benefit improvements accompany this alternative.

Note that the Regulation is "retroactive to the extent necessary to achieve its purposes."

The Alberta Superintendent of Pensions has also published Policy Bulletin #41, Funding Relief Provisions – 2009, summarizing the funding relief alternatives and providing guidance about how the Superintendent will exercise discretion granted by the regulations in certain areas. Included in the Bulletin are the following:

  • The Superintendent will accept valuations done with review dates on or after September 1, 2008 that use the Canadian Institute of Actuaries' new Standards of Practice for Determining Commuted Values (effective April 1, 2009). The existing standards must continue to be used for determining commuted values for members who terminate prior to April 1, 2009.
  • Detailed requirements for applications for the SEPP / MUPP solvency funding moratorium include a requirement that annual member statements contain a statement that the plan has been granted a moratorium on making solvency deficiency special payments and that the plan complies with any other conditions set by the Superintendent.
  • The solvency amortization period extension from 5 years to 10 years will not apply to previously established solvency deficiencies or solvency deficiencies established after the date of the valuation in support of the application, which deficiencies must continue to be amortized over the remainder of their 5-year schedule.
  • Additional, specified conditions for the preparation of actuarial valuation reports (such as limits on discount rates) must be met by plan sponsors applying for either the solvency funding moratorium or the solvency amortization extension, and for SMEPPs that have had their moratorium extended. The Superintendent will give due consideration where plans employ assumptions that vary from those specified; but, administrators must demonstrate why the variation is appropriate. The Bulletin specifies items that the Superintendent will consider when reviewing a valuation and reiterates that the Superintendent ultimately reserves the right to accept or refuse any valuation.

British Columbia

In January, 2009 the B.C. Superintendent of Pensions issued Information Bulletin No. PEN-09-001, Guidelines for Requests for Solvency Extensions for Defined Benefit Pension Plans. The Guidelines set out the information and documents required when a plan administrator seeks the approval of the Superintendent under section 6 of the British Columbia Pension Benefits Standards Act to an extension of the time period required for solvency payments due to "extenuating reasons."

The Guidelines list a number of specific factors that the Superintendent will consider and which all applications for extensions should address, including:

  • Is the request for a solvency deficiency payment extension demonstrably in the best interests of plan members?
  • Is the solvency deficiency the result of factors that were largely beyond the control of the plan administrator?
  • Would the special payments normally required to eliminate the solvency deficiency result in severe financial hardship for the plan sponsor which can only be resolved through the solvency extension?
  • Has the plan sponsor provided strong assurance of its ongoing financial viability for the period of the solvency extension?
  • Does the plan administrator have a good record of plan administration and regulatory filings?
  • Have all required contributions and special payments to the plan's fundholder been remitted within the regulatory deadlines?
  • Has the plan administrator reviewed the form and design of its plan to ensure that the benefits are affordable?

The Guidelines specify that the Superintendent likely will not approve applications resulting in solvency amortization periods in excess of 15 years.

Documents required by the Superintendent as part of an extension application include:

  • a current actuarial valuation which includes a schedule of payments certified by the actuary as being sufficient to fully amortize the solvency deficiency over the extended period;
  • a letter from the administrator identifying the extenuating reasons why the plan cannot make the required solvency deficiency payments and specifying the requested extension period;
  • a commitment from the administrator not to increase benefits during the extension period without the approval of the Superintendent;
  • copies of financial statements of the plan sponsor for the last 3 years;
  • a letter from the plan sponsor providing information on the financial prospects for the plan sponsor over the period of the extension; and
  • a full report from the plan's auditor or fundholder on the remittance of contributions for the past 3 years.

The Guidelines also require that if the application is approved by the Superintendent, the administrator must notify all plan members of the details of the extension.


These measures supplement the existing rules (which continue in place) in both Alberta and British Columbia permitting employers in SEPPs (and, in Alberta, MUPPs) to utilize letters of credit to satisfy their solvency special payment obligations.

It is noteworthy that, unlike other Canadian jurisdictions that have introduced solvency funding relief measures, neither Alberta's nor British Columbia's measures require advance notice to, or consent by, plan members or retirees. Both provinces do place considerable discretion in the Superintendent to determine whether the relief sought will be granted and upon what conditions. Plan sponsors that have, for example, already sought insolvency protection might find it difficult to convince the Superintendent that granting the relief is an appropriate exercise of discretion.

The difference in the approach taken by the two provinces is also striking. Alberta's measures go farther in introducing specific new rules allowing plan sponsors to seek a complete moratorium on solvency funding or an extension in the amortization period. British Columbia relies on the Superintendent's existing discretion to grant relief on amortization periods only. The British Columbia measures also appear more onerous in terms of the application requirements to justify the relief sought, while Alberta's rules seem to recognize the difficult situation most defined benefit plan sponsors have found themselves in due to the current economic crisis. The British Columbia rules impose conditions that could raise issues with creditors and with the sponsor's public markets disclosure obligations. Caution should be exercised in responding to the mandated questions in British Columbia.

It is interesting to note that Alberta's solvency moratorium applies to all solvency deficiency payments, while the amortization period extension from 5 years to 10 years only applies to solvency deficiencies created after August 31, 2008 and before 2010.

Sponsors considering availing themselves of either the solvency moratorium in Alberta or the solvency amortization period extension in either Alberta or British Columbia should consider their fiduciary obligations in both the pension governance and corporate governance context and their contractual obligations to creditors, and assess:

  • whether the sponsor's credit arrangements compel it to seek any pension funding relief that may be available;
  • what the impact will be on the sponsor and the pension plan at the end of the moratorium if the plan's funded position continues to deteriorate during the moratorium;
  • if the sponsor conducts an interim valuation to determine whether to take advantage of the relief measures, what its obligations are, in its capacity as plan administrator, arising from that information; and
  • what, if anything, should be communicated to plan members beyond the minimum requirements.

Christopher A. Brown is a partner in the Calgary office of Osler's Pensions and Benefits Department.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions