Archived - Regulations Amending Certain Regulations Made Under the Pension Benefits Standards Act, 1985

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December 2010


Related Document:


PENSION BENEFITS STANDARDS REGULATIONS, 1985

1. (1) The definitions “actuary” and “plan year” in subsection 2(1) of the Pension Benefits Standards Regulations, 19851 are repealed.

(2) The definition “solvency assets” in subsection 2(1) of the Regulations is replaced by the following:

“solvency assets” means the amount determined by the formula

A + B - C

where

A is the market value of the assets as determined at the valuation date, that relate to the defined benefit provisions of a plan,

B is the face value of all letters of credit in effect on the valuation date, other than those being used to fund a plan under Part 3 of the Solvency Funding Relief Regulations or Part 3 of the Solvency Funding Relief Regulations, 2009, up to a maximum of 15% of the amount referred to in the description of A, and

C is the estimated expense of the winding-up of the plan as certified by an actuary; (actif de solvabilité)

(3) Paragraph (b) of the definition “financial institution” in subsection 2(1) of the Regulations is replaced by the following:

(b) for the purposes of section 11.1, those entities referred to in subparagraphs (a)(i) to (vi) or a foreign institution for which an order of the Superintendent has been made under section 574 of the Insurance Companies Act; (institution financière)

(4) Paragraph (b) of the definition “solvency ratio” in subsection 2(1) of the Regulations is replaced by the following:

(b) for any other plan, the ratio of the solvency assets to the solvency liabilities, excluding those solvency assets and solvency liabilities that are attributable to benefits that are paid by means of an annuity, other than a revocable annuity, or an insurance contract, based on the most recent actuarial report; (ratio de solvabilité)

(5) Subsection 2(1) of the Regulations is amended by adding the following in alphabetical order:

“actuarial report” means an actuarial report filed with the Superintendent under subsection 9.01(5) or 12(2) of the Act or a copy of the report that is provided under subsection 9.01(6) of the Act. (rapport actuariel)

“letter of credit” means a letter of credit that meets the requirements of subsection 9.1(5) (lettre de crédit)

2. (1) Subparagraph 6(1)(b)(ii) of the French version of the Regulations is replaced by the following:

(ii) sous le nom d’une institution financière ou de son représentant, aux termes d’une entente ou d’une convention de fiducie conclue avec l’institution financière pour le compte du régime, laquelle entente ou convention indique clairement que le placement est détenu pour le compte du régime,

(2) Subparagraph 6(1)(b)(iii) of the Regulations is replaced by the following:

(iii) in the name of CDS Clearing and Depository Services Inc., or a nominee of it, in accordance with a custodial agreement or trust agreement, entered into on behalf of the plan with a financial institution, that clearly indicates that the investment is held for the plan.

3. (1) Subsection 9(8) of the Regulations is amended by adding the following after paragraph (d):

(d.1) the solvency ratios at the prior valuation date and the prior second valuation date shall be adjusted to increase the solvency assets by the face value of all letters of credit included in the solvency assets on the valuation date and to reduce the solvency assets by the face value of all letters of credit included in the solvency assets on the prior valuation date or prior second valuation date, as the case may be;

(2) Subsection 9(11) of the Regulations is replaced by the following:

(11) The solvency ratio at the valuation date, without the adjustments made under subsection (8) or (9), may be used as the solvency ratio for a prior valuation date or prior second valuation date in respect of which no actuarial report was filed or provided to the Superintendent.

(3) Subsection 9(13) of the Regulations is replaced by the following:

(13) If an amendment to the plan increases the solvency liabilities, the increase in solvency liabilities shall be valued using the actuarial assumptions and methods used in the solvency valuation of the actuarial report for the most recently completed plan year before the effective date of the amendment.
(13.1) Subject to subsection (13.2), an employer, other than a participating employer under a multi-employer pension plan, may reduce the amount of any solvency special payment by the face value of a letter of credit that has been provided to a trustee or transferred to a trust under section 9.11 of the Act.

(13.2) An employer may not act under section 9.11 of the Act if the face value of all letters of credit provided to a trustee or transferred to a trust under section 9.11 of the Act exceeds, or would exceed, 15% of the market value of the assets that relate to the defined benefit provisions of the plan, as determined at the end of the most recent plan year.

(13.3) For the purposes of section 9.16 of the Act, a payment that is required to be made under subsection 9(1.1) of the Act may be reduced if

(a) the payment is a solvency special payment;

(b) the Crown corporation meets the requirements of section 9.2;

(c) the aggregate amount of all reductions does not exceed or would not exceed 15% of the market value of the assets that relate to the defined benefit provisions of the plan, as determined at the end of the most recent plan year.

(13.4) The aggregate amount of all reductions made under section 9.16 of the Act may be adjusted in a plan year by subtracting the difference between

(a) the amount of the solvency special payment for the plan year following the valuation date, and

(b) the amount of the solvency special payment that would be payable for the plan year following the valuation date if no reductions were made under section 9.16 of the Act.

(4) Subsection 9(14) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) an amount required to be paid by an employer under a defined contribution provision shall be paid not less frequently than monthly and not later than 30 days after the end of the period in respect of which the amount is required to be paid.

4. The Regulations are amended by adding the following after section 9:
LETTERS OF CREDIT

9.1. (1) The following definitions apply in this section.
“acceptable rating” means the rating, given by a credit rating agency to an issuer at the time of the issuance or renewal of a letter of credit, that is at least equal to one of the following ratings:

(a) A, from Dominion Bond Rating Service Limited;

(b) A, from Fitch Ratings;

(c) A2, from Moody's Investors Service; and

(d) A, from Standard & Poor's Ratings Services. (note acceptable)

“bank” means a bank or authorized foreign bank, as defined in section 2 of the Bank Act. (banque)

“cooperative credit society” means a cooperative credit society to which the Cooperative Credit Associations Act applies or a cooperative credit society that is incorporated and regulated by or under an Act of the legislature of a province. (coopérative de crédit)

“default” means the occurrence of one of the following:

(a) the written notification to the Superintendent that the administrator intends to terminate or wind up the whole of the pension plan under subsection 29(5) of the Act;

(b) the amendment of the plan, resolution by the employer or coming into force of any other measure that effects the termination of the whole of the plan;

(c) the Superintendent's declaration under subsection 29(2) or (2.1) of the Act that terminates the whole of the plan;

(d) the employer becomes bankrupt or there is a filing by or against the employer under the Winding-up and Restructuring Act;

(e) the non-renewal of a letter of credit for its full face value unless

(i) it has been replaced by another letter of credit for the same face value on or before the expiry of the letter of credit,

(ii) an amount equal to the face value of the letter of credit has been remitted to the pension fund on or before the expiry of the letter of credit, or

(iii) the face value of the letter of credit has been reduced in accordance with subsection (2), (3) or (4); and

(f) the failure by an employer to comply with a direction issued by the Superintendent under section 11 of the Act with respect to the face value a letter of credit referred to in subsection 9(13.1) (défaut)

“issuer” means a bank or a cooperative credit society that has an acceptable rating by two credit rating agencies, is not an employer or affiliated with an employer within the meaning of subsection 2(2) of the Canada Business Corporations Act and is a member of the Canadian Payment Association. (émetteur)

(2) If the aggregate face value of all letters of credit held for the benefit of the plan exceeds 15% of the market value of the assets that relate to the defined benefit provisions of the plan as determined at the valuation date and if, based on the most recent actuarial report,

(a) the average solvency ratio and the solvency ratio of the plan are one or more, the aggregate face value of the letters of credit may be reduced by the lesser of

(i) the amount by which the aggregate face value of all letters of credit exceeds 15% of the market value of the assets that relate to the defined benefit provisions of the plan as determined at the valuation date, and

(ii) the lesser of the solvency excess and the excess of the solvency assets over the solvency liabilities; and

(b) either the average solvency ratio or the solvency ratio of the plan is less than one, the face value of the letters of credit may be reduced by the amount of the excess referred to in subparagraph (a)(i) to the extent of the difference between

(i) the amount of the solvency special payment for the plan year following the valuation date, and

(ii) the amount of the solvency special payment that does not take into consideration the maximum referred to in the description of B of the definition “solvency assets” in subsection 2(1) for the plan year following the valuation date.

(3) An employer may reduce the face value of a letter of credit after making a payment to the pension fund of an amount of the reduction.

(4) The face value of a letter of credit may be reduced if, based on the most recent actuarial report,

(a) the solvency ratio of the plan would have been no less than 1.05 had the reduced face value been in effect at the valuation date; and

(b) the average solvency ratio of the plan would have been no less than one had the reduced face value been in effect at the valuation date.

(5) A letter of credit shall be an irrevocable and unconditional standby letter of credit that

(a) is in accordance with the rules of the International Standby Practices ISP98, International Chamber of Commerce Publication No. 590, as amended from time to time;

(b) specifies the date that it becomes effective, which can be no later than the date on which the instalment of the special payment that is being replaced is due, and that its expiry date shall be the day on which the plan year ends;

(c) provides that the issuer will pay the face value of the letter of credit on demand from the trustee without inquiring whether the trustee has a right to make the demand;

(d) is payable in Canadian currency;

(e) provides that

(i) the insolvency, liquidation or bankruptcy of the employer is to have no effect on the rights or the obligations of the issuer or the trustee of the letter of credit,

(ii) it will, in accordance with these Regulations, be renewed, replaced or allowed to expire without renewal or replacement, and

(iii) it may not be

(A) assigned except by the issuer to another issuer, or

(B) amended except

(I) on a renewal to increase the face value or to decrease the face value,

(II) if a successor issuer has taken over the rights and obligations under it from a predecessor issuer, to change the name of that predecessor to the name of that successor, and

(III) following an assignment, to reflect the change in issuer;

(f) provides that if the issuer assigns the letter of credit without the agreement of the employer or, after the issuance of the letter of credit, fails to meet the definition of an issuer, the issuer is still required to pay the face value of the letter of credit on demand from the trustee; and

(g) provides that any amendments to the letter of credit be provided to the employer within five days after the amendment is made.

(6) The employer or, if the employer is not the administrator of the plan, the administrator shall enter into a trust agreement or may amend any existing trust agreement that they may have with the trustee regarding the letters of credit.

(7) If the employer is not the administrator, the administrator shall give a copy of the trust agreement to the employer within 10 business days after entering into or amending a trust agreement.

(8) The trust agreement shall provide that

(a) the trustee shall hold letters of credit in Canada in trust for the plan;

(b) the definition “default” in subsection (1) applies to the agreement;

(c) the employer shall immediately notify, in writing, the trustee and the Superintendent and, if the employer is not the administrator of the plan, the administrator of a default;

(d) if not otherwise notified under paragraph (c), the administrator shall notify, in writing, the trustee and the Superintendent of a default immediately after becoming aware of it;

(e) on receipt of the notice referred to in paragraph (c) or (d), the trustee shall immediately make a demand for payment of the face value of

(i) all of the letters of credit held for the benefit of the plan, if the default is one that is described in any of paragraphs (a) to (d) and (f) of the definition “default” in subsection (1), and

(ii) the letter of credit that has not been renewed, if the default is one that is described in paragraph (e) of that definition;

(f) on receipt of a written notice of default from any person other than the employer or the administrator, the trustee shall

(i) immediately notify, in writing, the employer, the administrator and the Superintendent of the notice, and

(ii) make a demand for payment of the face value of all of the letters of credit held for the benefit of the plan unless the administrator provides a written notice to the trustee within 30 days after receipt of the notice that the default has not occurred;

(g) when a trustee makes a demand for payment of the face value of a letter of credit held for the benefit of the plan, it shall notify, in writing, the employer, the administrator and the Superintendent that it has made the demand;

(h) the trustee shall immediately notify, in writing, the employer, the administrator and the Superintendent if the issuer does not pay the face value of a letter of credit after a demand for payment has been made;

(i) the trustee shall not make a demand for payment if a letter of credit expires without being renewed or if the face value is being reduced, in accordance with these Regulations; and

(j) the administrator shall notify the trustee of any circumstance in which a letter of credit may expire or when the face value of a letter of credit may be reduced, under these Regulations.

(9) The employer shall provide to the trustee

(a) the letter of credit, on its initial issuance, at least 15 days before the day on which the first instalment of a solvency deficiency payment to which the letter of credit relates is due;

(b) if a letter of credit is replacing another, the replacement letter of credit at least 15 days before the expiry of the letter of credit that is being replaced;

(c) if an expiring letter of credit is to be renewed, the renewed letter of credit at least 15 days before the date that it would otherwise have expired; and

(d) if the letter of credit is being amended, the amended letter of credit within 15 days after the date that the letter of credit was amended.

(10) The trustee shall, in writing or in any other form that the letter of credit provides, make a demand in respect of a letter of credit.

(11) An issuer who assigns a letter of credit to another issuer shall inform the Superintendent, the employer, the administrator and the trustee of the transaction within 15 days after the assignment.

CROWN CORPORATIONS

9.2. A Crown corporation may reduce solvency special payments for a plan year under section 9.16 of the Act if

(a) it is an agent of Her Majesty in right of Canada;

(b) it has notified the Minister and the appropriate Minister, as defined in subsection 83(1) of the Financial Administration Act, of the decision to reduce its solvency special payments;

(c) it obtains from the Minister and the appropriate Minister, as defined in subsection 83(1) of the Financial Administration Act, letters acknowledging that they have been informed that it intends to reduce its solvency special payments and that they do not object to the reduction; and

(d) it files the information and documentation described in paragraphs (a) and (b) with the Superintendent within 60 days after the reduction is made.

VOID AMENDMENT — SOLVENCY RATIO

9.3. (1) For the purposes of paragraph 10.1(2)(c) of the Act, the prescribed solvency ratio level is 0.85.

(2) For the purposes of paragraph 10.1(2)(c) of the Act, the solvency ratio following the amendment is the solvency ratio set out in the most recent actuarial report adjusted to reflect

(a) the effect on the solvency ratio of the increase in solvency liabilities as a result of the amendment, determined in accordance with subsection 9(13); and

(b) the effect of any lump sum payment to the pension fund made beforethe effective date of the amendment.

(3) For the purposes of paragraph 10.1(2)(d) of the Act, the prescribed solvency ratio level is one

(a) during a negotiation period referred to in subsection 29.04(1) of the Act; and

(b) while a funding schedule approved by the Minister under section 29.3 of the Act is in effect.

5. Subsection 10(2) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) in respect of an amount required to be paid under a defined contribution provision, the greater of the rate of return of the fund as at the date that the amount was required to be paid and 0%.

6. The Regulations are amended by adding the following after section 10:

DISTRESSED PENSION PLAN WORKOUT SCHEME

Election

10.1. An election under subsection 29.03(1) of the Act may only be made once every 48 months.

10.2. For the purposes of subsection 29.03(3) of the Act,

(a) an employer that is not subject to proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act, shall make the declaration in Form 1 of Schedule VI if it is governed by a Board of Directors or in Form 2 of Schedule VI if it is not governed by a Board of Directors; or

(b) an employer that is subject to proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act, shall make the declaration in Form 3 of Schedule VI if it is governed by Board of Directors and in Form 4 of Schedule VI if it is not governed by a Board of Directors.

10.3. An election under section 29.03 of the Act shall not be made in respect of a plan that is subject to the Air Canada Pension Plan Funding Regulations, 2009 or the Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010.

Information to be Provided to Members and Beneficiaries

10.4. The employer shall provide the following information to the members and beneficiaries within 10 days after the beginning of the negotiation period:

(a) notice that the employer has entered the distressed pension plan workout scheme;

(b) a statement indicating that a request for approval by the Minister of a funding schedule may only be made if less than one third of the members and less than one third of the beneficiaries object;

(c) a statement indicating that a collective bargaining agent may object or consent to a proposed workout agreement on behalf of the members that it represents;

(d) a statement indicating that a court-appointed representative may consent to a proposed workout agreement if less than one third of the members or one third of the beneficiaries that they represent object to the agreement;

(e) a statement indicating that the Minister’s approval is required to give effect to the funding schedule; and

(f) written notice of their right to examine the copies of the documents and information referred to in paragraph 28(1)(c) of the Act.

10.5. The representative, or the employer if the representative consents, shall, in writing, inform the members or beneficiaries whom they represent of their representation within 10 business days after their appointment by the Federal Court or the court referred to in section 10.8.
End of Negotiation Period

10.6. (1) For the purposes of subsection 29.04(1) of the Act, the negotiation period ends on the earlier of

(a) the day on which the funding schedule is approved by the Minister, and

(b) the date determined under subsection (2)

(2) If the declaration referred to in subsection 29.03(4) of the Act is filed in the six months before the required filing date of the actuarial report, the negotiation period ends 90 days after the required filing date of the actuarial report. Otherwise, the negotiation period ends nine months after the date on which the declaration is filed.

Appointment of Representatives

10.7. For the purposes of subsection 29.08(3) of the Act, the representatives shall

(a) be capable of fairly and adequately representing the interests of the persons they represent; and

(b) not have an interest that is in conflict with the interests of the persons represented.

10.8. For the purposes of subsection 29.08(2) of the Act, the appropriate court is the court in which a notice of intention or a proposal is filed under Part III of the Bankruptcy and Insolvency Act or the court that issued the initial order under the Companies’ Creditors Arrangement Act.

Information to be Provided to Representatives

10.9. (1) The administrator, or the employer if the administrator is not the employer, shall provide to a representative

(a) within 10 days after the representative’s appointment under subsection 29.08(3) of the Act

(i) copies of the annual information return, the actuarial reports and the financial statements that have been filed with the Superintendent within the past three plan years under subsections 12(1) and (2) of the Act,

(ii) a copy of the plan,

(iii) a copy of the statement of investment policies and procedures of the plan established under section 7.1,

(iv) a list of the 10 largest asset holdings of the pension fund by asset value, along with the corresponding asset value, and

(v) the total face value of all current letters of credit held in trust for the plan; and

(b) within 10 business days after a request of the representative, a copy of any document that members may examine under paragraph 28(1)(c) of the Act.

(2) If the representative is a bargaining agent, the administrator, or the employer if the administrator is not the employer, shall provide the information required under paragraph (1)(a) to the representative within 30 days after the day on which the declaration is filed under subsection 29.03(4) of the Act.

Disclosure Requirements — Proposed Workout Agreement

10.91. (1) For the purposes of subsection 29.2(1) of the Act, the members and beneficiaries shall be provided with the following information within 10 days after the day on which the employer and the representatives enter into the proposed workout agreement:

(a) written notice that the representatives and the employer have negotiated a proposed workout agreement respecting the funding schedule;

(b) the amount of the going concern deficit and of the solvency deficiency subject to the proposed workout agreement and the proposed funding schedule for those amounts;

(c) the special payments that would have been payable in the current plan year if the going concern deficit and the solvency deficiency had been funded in accordance with section 9;

(d) a written notice indicating that the funding schedule set out in the proposed workout agreement may only be submitted to the Minister for approval if less than one third of the members and less than one third of beneficiaries of the plan object; and

(e) if members and beneficiaries are represented by a representative that is not a bargaining agent, a description of how the members or beneficiaries may object to the proposed agreement and the period during which an objection may be made.

(2) For the purposes of subsection 29.09(1) of the Act, the employer and administrator shall provide the representatives with any information required to comply with subsection (1)

Consent of Members and Beneficiaries

10.92. A period of 30 days beginning on the day on which the information is provided under section 10.91 is prescribed for the purposes of subsection 29.2(2) of the Act.

10.93. A period of 40 days beginning on the day on which the information is provided under section 10.91 is prescribed for the purposes of subsection 29.3(2) of the Act.

Request for Approval

10.94. For the purposes of subsection 29.3(3) of the Act, the request for approval of the funding schedule shall be submitted to the Minister within 15 days after the end of the period referred to in section 10.93 and shall be accompanied by a description of how the funding schedule addresses the criteria referred to in section 10.95.

Ministerial Considerations

10.95. For the purposes of subsection 29.3(4) of the Act, the Minister shall consider

(a) the extent to which the defined benefit provisions of the plan have been amended and the extent to which those amendments have changed the ongoing cost structure of the plan; and

(b) the manner in which the proposed workout agreement addresses the sustainability of the plan with reference to such factors as the investment policies of the plan, the demographic profile of the plan’s membership and the nature of the plan’s benefits.

Notification of Minister’s Decision

10.96. The administrator, or the representative if the representative consents, shall notify all members and beneficiaries of the Minister’s decision under subsection 29.3(4) of the Act within five business days after receiving notification from the Minister.
Minimum Requirements for Funding Schedule

10.97. The funding schedule shall meet the following requirements:

(a) the funding schedule shall only address the funding and liquidation of a solvency deficiency and an unfunded liability as determined at the latest valuation date minus special payments and other payments due to the plan before the start of the negotiation period;

(b) the funding schedule shall specify the amounts of the going concern payments and solvency payments payable in each plan year that are used to fund the solvency deficiency and unfunded liability referred to in paragraph (a);

(c) the payments shall be paid to the plan in equal monthly instalments;

(d) the aggregate present value, as at the end of the most recent plan year preceding the establishment of the funding schedule, of the going concern payments included in the funding schedule and the going concern special payments due to the plan before the start of the negotiation period shall be at least equal to the going concern deficit of the plan at the end of that year;

(e) the aggregate present value, as at the end of the most recent plan year preceding the establishment of the funding schedule, of the solvency payments and the going concern payments included in the funding schedule and special payments due to the plan before the start of the negotiation period shall be at least equal to the solvency deficiency of the plan as at the end of the plan year preceding the plan year in which the payment is to be made;

(f) any annual going concern payment included in the funding schedule shall be no less than the annual amount of interest on the outstanding balance of the going concern deficit of the plan as at the end of the plan year preceding the plan year in which the payment is to be made;

(g) any annual solvency payment included in the funding schedule shall be no less than the annual amount of interest on the outstanding balance of the solvency deficiency as at the end of the plan year preceding the plan year in which the payment is to be made;

(h) the aggregate going concern payments to be made in the first half of the funding schedule shall be no less than 40% of the aggregate going concern payments for the entire duration of the funding schedule;

(i) the aggregate solvency payments to be made in the first five plan years of the funding schedule shall be no less than 40% of the aggregate solvency payments for the entire duration of the funding schedule;

(j) the interest rate used to determine the present value of going concern payments referred to in paragraph (d) and the interest referred to in paragraph (f) is the same as the interest rate used to determine the going concern liabilities of the plan as at the valuation date; and

(k) the interest rate used to determine the present value of solvency payments in accordance with paragraph (e) and the interest in accordance with paragraph (g) is the same as the interest rate used to determine the solvency liabilities of the plan as at the valuation date.

Optional Requirements of Funding Schedule

10.98. A funding schedule may provide that if

(a) the funding schedule includes the funding of an unfunded liability or solvency deficiency and the unfunded liability or solvency deficiency is liquidated at a rate greater than the sum of payments set out in the funding schedule by the making of additional payments, the amount of a payment set out in a funding schedule for a subsequent year may be reduced if the outstanding balance of an unfunded liability that is being liquidated by the remaining payments set out in the funding schedule or the solvency deficiency that is being liquidated by the remaining payments set out in the funding schedule will at no time be greater than it would have been had the payments that were required to be made under the funding schedule in relation to the unfunded liability or solvency deficiency, whichever is applicable, been made;

(b) the funding schedule includes the funding of an unfunded liability and the aggregate of the present value of payments set out in the funding schedule and of going concern special payments, established in respect of a period after the valuation date, exceeds the going concern deficit, that excess may be applied to reduce the going concern payments that will become due at the latest dates in the approved funding schedule in such a way that the present value of those payments is reduced by the amount of reduction applied to the outstanding balance of the unfunded liability; and

(c) there is a solvency excess as described in subsection 10.991(2), the payments established to liquidate a solvency deficiency that will become due at the latest dates in the approved funding schedule may be eliminated or reduced in such a manner that the present value of the remaining payments set out in the funding schedule to liquidate the solvency deficiency is reduced by the solvency excess.

Occurrence of Events After Approval of a Funding Schedule

10.99. For the purposes of section 9, an unfunded liability that emerges after the day on which the funding schedule was approved by the Minister under section 29.3 of the Act shall be calculated as the amount by which the going concern deficit of a plan as determined at the valuation date exceeds the aggregate of

(a) the present value of going concern special payments established in respect of a period after the valuation date,

(b) the present value of the going concern payments set out in the funding schedule, established in respect of a period after the valuation date, and

(c) the present value of the solvency payments set out in the funding schedule, established in respect of a period after the valuation date.

10.991. (1) For the purposes of section 9, a solvency deficiency that emerges after the day on which a funding schedule is approved by the Minister under section 29.3 of the Act shall be calculated as the amount by which the solvency liabilities exceed the aggregate of

(a) the adjusted solvency asset amount,

(b) the present value of the solvency payments set out in the funding schedule, established in respect a period after the valuation date, and

(c) the present value of the going concern payments set out in the funding schedule, established in respect of a period beginning after the valuation date and ending on the date of the last solvency payment set out in the funding schedule referred to in paragraph (b)

(2) For the purposes of section 9, a solvency excess that emerges after the day on which a funding schedule is approved by the Minister under section 29.3 of the Act shall be calculated as the amount by which the aggregate of the following amounts exceeds the solvency liabilities:

(a) the adjusted solvency asset amount,

(b) the present value of the solvency payments set out in the funding schedule, established in respect of a period after the valuation date, and

(c) the present value of the going concern payments set out in the funding schedule, established in respect of a period beginning after the valuation date and ending on the date of the last solvency payment set out in the funding schedule referred to in paragraph (b)

7. Paragraph 11(1)(a) of the French version of the Regulations is replaced by the following:

a) une copie du texte du régime, du contrat d’assurance, de la convention de fiducie, de la résolution, des dispositions de la convention collective relatives aux pensions, des règlements administratifs et de tout autre document constitutif ou à l’appui du régime, du fonds de pension et des modifications qui y sont apportées;

8. Subsection 16(1) of the Regulations is replaced by the following:

16. (1) For the purposes of the definition “surplus” in subsection 2(1) of the Act, the amount by which the assets of the plan exceeds its liabilities shall be determined by subtracting the liabilities of the plan from its assets, as those assets and liabilities are shown in an actuarial report and, in the case of a plan that has not been fully terminated, as those assets and liabilities are valued in the report according to a going concern valuation.

9. The Regulations are amended by adding the following after section 24:

24.1 (1) For the purposes of this section, “solvency deficit” means the amount by which the solvency liabilities as at the date of termination of a plan or the valuation date, as the case may be, exceeds the sum of the solvency assets at that date and the amounts required to be paid under subsection 29(6) of the Act.

(2) For the purposes of subsection 29(6.1) of the Act,

(a) an employer shall pay an amount equal to the solvency deficit as at the date of termination of the plan either in a lump sum or by equal annual payments sufficient to liquidate the solvency deficit over a period of five years from the date of termination;

(b) the interest rate used to determine the annual payments is the same as the interest rate used to determine the solvency liabilities of the plan at the date of termination; and

(c) the annual payments shall be paid by equal monthly instalments no later than 30 days after the end of each month.

(3) The annual payment determined under paragraph (2)(a) that is to be paid in the plan year in which the plan is terminated may be reduced by the amounts required to be paid under subsection 29(6) of the Act.

(4) An actuarial report, filed after termination and until a plan is wound up, shall set out the remaining solvency assets, solvency liabilities, solvency deficit and remaining payments required to liquidate the solvency deficit as at the valuation date. The solvency assets and solvency deficit shall not include the face value of any letters of credit.

(5) If the present value of remaining payments determined in accordance with paragraph (2)(a) exceeds the remaining solvency deficit established as at the valuation date in accordance with the actuarial report referred to in subsection (4), the payments remaining to be made in respect of the solvency deficit are reduced pro rata.

(6) If the remaining solvency deficit established as at the valuation date in accordance with the actuarial report referred to in subsection (4) exceeds the present value of remaining payments determined in accordance with paragraph (2)(a), the remaining payments are increased pro rata such that the remaining payments will liquidate the remaining solvency deficit over the remainder of the five-year period beginning on the date of termination.

(7) Any solvency deficit that arises five or more years after the date of termination of the plan shall be immediately paid down.

(8) For the purposes of subsection 29(6.3) of the Act, the portion of the remaining amount that is attributable to the payments made under subsection 29(6.1) of the Act is equal to the lesser of

(a) the amount remaining in the pension fund at the date of winding-up, and

(b) the accumulated value at the date of winding-up, with interest at the rates earned by the pension fund, of the payments made under subsection 29(6.1) of the Act.

10. (1) The definition “opération” in section 1 of Schedule III to the French version of the Regulations is repealed.

(2) Section 1 of Schedule III to the French version of the Regulations is amended by adding the following in alphabetical order:

« transaction » Vise notamment :

a) tout placement dans des valeurs mobilières;

b) l’acquisition, notamment par cession, d’un prêt consenti par un tiers;

c) la constitution d’une sûreté sur des titres;

d) la modification, le renouvellement ou la prolongation d’une transaction antérieure.

Ne sont pas visés par la présente définition le versement de prestations de pension ou autres, le transfert de droits à pension et le retrait de cotisations d’un régime. (transaction)

(3) Paragraph (c) of the definition “transaction” in section 1 of Schedule III to the English version of the Regulations is replaced by the following:

(c) the taking of a security interest in securities or a hypothec on securities, and

(4) The expression “(opération)” at the end of the definition “transaction” in section 1 of Schedule III to the English version of the Regulations is replaced by the expression “(transaction)”.

11. The portion of subsection 12(3) in Schedule III to the Regulations before paragraph (a) is replaced by the following:

(3) Any financial statement of a plan filed under subsection 12(2) of the Act shall value the common shares of the real estate corporation held by, or on behalf of, the plan at a value not greater than the amount obtained by multiplying

12. The portion of subsection 13(3) in Schedule III to the Regulations before paragraph (a) is replaced by the following:

(3) Any financial statement of the plan filed under subsection 12(2) of the Act shall value the common shares of the resource corporation held by, or on behalf of, the plan at a value not greater than the amount obtained by multiplying

13. The Regulations are amended by adding, after Schedule V, the Schedule VI set out in the schedule to these Regulations.

14. The French version of the Regulations is amended by replacing “opération” and “opérations” with “transaction” and “transactions”, respectively, with any modifications that the circumstances require, in the following provisions:

(a) the definition “valeur marchande” in subsection 2(1);

(b) paragraph 7.1(1)(h);

(c) paragraph 20(1)(c);

(d) paragraph 20.1(1)(j);

(e) paragraph 20.2(1)(c);

(f) paragraph 20.3(1)(j);

(g) paragraphs 21(1)(a) and (b);

(h) the definition “conditions du marché” in section 1 of Schedule III;

(i) section 15 of Schedule III;

(j) subparagraphs 16(1)(b) and (2)(b) of Schedule III; and

(k) subsections 17(1), (3) and (4) of Schedule III.

15. The French version of the Regulations is amended by replacing “nominataire” with “représentant” in subparagraph 6(2)(a)(ii)

16. The French version of the Regulations is amended by replacing “société coopérative de crédit” with “coopérative de crédit” in the following provisions:

(a) paragraph (a) of the definition “institution étrangère” in subsection 1(1); and

(b) subparagraphs (a)(iii) and (vi) of the definition “institution financière” in subsection 1(1)

AIR CANADA PENSION PLAN SOLVENCY DEFICIENCY FUNDING REGULATIONS

17. Section 14 of the Air Canada Pension Plan Solvency Deficiency Funding Regulations2 is replaced by the following:

14. For the purpose of paragraph 10.1(2)(b) of the Act, the prescribed solvency ratio level is the solvency ratio calculated on the basis of the most recent actuarial report.

SOLVENCY FUNDING RELIEF REGULATIONS

18. (1) The definition “société coopérative de crédit” in subsection 1(1) of the French version of the Solvency Funding Relief Regulations3 is repealed.

(2) The definition “émetteur” in subsection 1(1) of the French version of the Regulations is replaced by the following:

« émetteur » Banque ou coopérative de crédit qui détient une note acceptable et qui n’est ni l’employeur, ni un membre du même groupe — au sens du paragraphe 2(2) de la Loi canadienne sur les sociétés par actions — que l’employeur. (issuer)

(3) Paragraph (c) of the definition “default” in subsection 1(1) of the Regulations is replaced by the following:

(c) the Superintendent’s declaration under subsection 29(2) or (2.1) of the Act that terminates the whole plan;

(4) Subsection 1(1) of the French version of the Regulations is amended by adding the following in alphabetical order:

« coopérative de crédit » Coopérative de crédit régie par la Loi sur les associations coopératives de crédit ou constituée en personne morale sous le régime d’une loi provinciale et régie par une telle loi. (cooperative credit society)

19. Section 11 of the Regulations is replaced by the following:

11.. For the purposes of paragraph 10.1(2)(b) of the Act, the prescribed solvency ratio level for the first five plan years of funding in accordance with this Part is the solvency ratio calculated on the basis of the most recent actuarial report.

20. Subsection 20(2) of the Regulations is replaced by the following:

(2) A letter of credit shall be obtained not later than the day on which the actuarial report is filed with or provided to the Superintendent for the first plan year of funding, and at least 30 days before the beginning of each subsequent plan year that is covered by it.

21. Paragraph 26(1)(a) of the Regulations is replaced by the following:

(a) the amount by which the aggregate amount of payments that the employer has made to the pension fund in the previous plan year exceeds the total of the required special payments and the normal cost of the plan for that year as shown in an actuarial report; or

22. Subsection 29(2) of the Regulations is replaced by the following:

(2) Except if a plan is fully terminated, the administrator shall have an actuarial report prepared — in which the present value of the special payments referred to in subsection 19(1) shall be zero — valuing the plan as at the last day of the plan year in which the default occurs.

23. Section 30 of the Regulations is renumbered as subsection 30(1) and is amended by adding the following:

(2) Paragraphs (1)(b) and (c) do not apply if the face amount of the letters of credit obtained to fund the plan under this Part is included as a solvency asset as defined in subsection 2(1) of the Pension Benefit Standards Regulations, 1985.

SOLVENCY FUNDING RELIEF REGULATIONS, 2009

24. (1) The definition “société coopérative de crédit” in subsection 1(1) of the French version of the Solvency Funding Relief Regulations, 20094 is repealed.

(2) The definition “émetteur” in subsection 1(1) of the French version of the Regulations is replaced by the following:

« émetteur » Banque ou coopérative de crédit qui détient une note acceptable et qui n’est ni l’employeur, ni un membre du même groupe — au sens du paragraphe 2(2) de la Loi canadienne sur les sociétés par actions — que l’employeur. (issuer)

(3) Paragraph (c) of the definition “default” in subsection 1(1) of the Regulations is replaced by the following:

(c) the Superintendent's declaration under subsection 29(2) or (2.1) of the Act that terminates the whole plan;

(4) Subsection 1(1) of the French version of the Regulations is amended by adding the following in alphabetical order:
« coopérative de crédit » Coopérative de crédit régie par la Loi sur les associations coopératives de crédit ou constituée en personne morale sous le régime d’une loi provinciale et régie par une telle loi. (cooperative credit society)

25. Section 7 of the Regulations is replaced by the following:

7. For the purposes of paragraph 10.1(2)(b) of the Act, the prescribed solvency ratio level for the 2009 plan year is the solvency ratio calculated on the basis of the actuarial report that reported the deficiency.

26. Paragraph 28(1)(a) of the Regulations is replaced by the following:

(a) the amount by which the aggregate amount of payments that the employer has made to the pension fund in the previous plan year exceeds the total of the annual special payments made in accordance with this Part and the normal cost of the plan for that year as shown in the actuarial report; or

27. Subsection 31(2) of the Regulations is replaced by the following:

(2) Except when a plan is fully terminated, the administrator shall have an actuarial report prepared — in which the present value of the special payments referred to in subsection 21(1) shall be zero — valuing the plan as at the last day of the plan year in which the default occurs.

28. Section 32 of the Regulations is renumbered as subsection 32(1) and is amended by adding the following:

(2) Paragraphs (1)(b) and (c) do not apply if the face amount of the letters of credit obtained to fund the plan under this Part is included as a solvency asset as defined in subsection 2(1) of the Pension Benefit Standards Regulations, 1985.

COMING INTO FORCE

29. These Regulations come into force on the day on which section 1795 of the Jobs and Economic Growth Act, chapter 12 of the Statutes of Canada, 2010, come into force, but if they are registered after that day, they come into force on the day on which they are registered.


1. SOR/87-19
2. SOR/2004-174
3. SOR/2006-275
4. SOR/2009-182

SCHEDULE
(Section 12)

SCHEDULE VI
(Section 10.2)

FORM 1

DECLARATION OF EMPLOYER WHO IS NOT SUBJECT TO PROCEEDINGS UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT OR PART III OF THE BANKRUPTCY AND INSOLVENCY ACT AND WHO IS GOVERNED BY A BOARD OF DIRECTORS

I, the undersigned, an officer of the employer, having been duly authorized by the Board of Directors, declare that

(a) the employer does not anticipate being able to remit the special payments required under subsection 9(1.1) of the Pension Benefits Standards Act, 1985 without seriously impairing the ability of the employer to continue in operation; and

(b) the employer intends to negotiate with the representatives of the members and former members with the purpose of entering into a workout agreement.

FORM 2

DECLARATION OF EMPLOYER WHO IS NOT SUBJECT TO PROCEEDINGS UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT OR PART III OF THE BANKRUPTCY AND INSOLVENCY ACT AND WHO IS NOT GOVERNED BY A BOARD OF DIRECTORS

I, the undersigned, an officer of the employer, having been duly authorized by the persons who have the authority to direct or authorize the actions of that body, declare that

(a) the employer does not anticipate being able to remit the special payments required under subsection 9(1.1) of the Pension Benefits Standards Act, 1985 without seriously impairing the ability of the employer to continue in operation; and

(b) the employer intends to negotiate with the representatives of the members and former members with the purpose of entering into a workout agreement.

FORM 3

DECLARATION OF EMPLOYER WHO IS SUBJECT TO PROCEEDINGS UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT OR PART III OF THE BANKRUPTCY AND INSOLVENCY ACT AND WHO IS GOVERNED BY A BOARD OF DIRECTORS

I, the undersigned, an officer of the employer, having been duly authorized by the Board of Directors, declare that

(a) the employer is subject to proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act; and

(b) the employer intends to negotiate with the representatives of the members and former members with the purpose of entering into a workout agreement.

FORM 4

DECLARATION OF EMPLOYER WHO IS SUBJECT TO PROCEEDINGS UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT OR PART III OF THE BANKRUPTCY AND INSOLVENCY ACT AND WHO IS NOT GOVERNED BY A BOARD OF DIRECTORS

I, the undersigned, an officer of the employer, having been duly authorized by the persons who have the authority to direct or authorize the actions of that body, declare that

(a) the employer is subject to proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act; and

(b) the employer intends to negotiate with the representatives of the members and former members with the purpose of entering into a workout agreement.