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Ottawa, June 12, 2009
2009-059
Minister of Finance Announces Coming Into Force of Pension Solvency Regulations
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The Honourable Jim Flaherty, Minister of Finance, today announced the coming into force of new regulations that provide temporary solvency funding relief for federally regulated defined benefit pension plans.
The measures cover plans established for employees working in areas that fall under federal jurisdiction. These plans currently represent 7 per cent of all private pension plans in Canada, accounting for approximately 12 per cent of pension assets.
"These measures will help protect pension benefits while allowing companies more flexibility in meeting their pension obligations," said Minister Flaherty.
The measures coming into force today will:
- Extend the solvency funding payment period by one year for deficiencies reported as of year-end between November 1, 2008 and October 31, 2009.
- Extend the solvency funding payment period to 10 years from 5 years with the agreement of members and retirees.
- Extend the solvency funding payment period to 10 years from 5 years when the difference is secured with a letter of credit.
- Extend the solvency funding payment period to 10 years from 5 years for agent Crown corporations with terms and conditions to ensure a level playing field.
- Allow asset smoothing above 110 per cent with the difference in payments subject to a deemed trust.
As announced in Canada’s Economic Action Plan, the Government has conducted national consultations on Canada’s legislative and regulatory framework for federally regulated private pension plans, chaired by Ted Menzies, Parliamentary Secretary to the Minister of Finance, with a view to introducing comprehensive new regulations in the fall.
For more information on Canada’s Economic Action Plan, please visit www.actionplan.gc.ca.
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For further information, media may contact:
Chisholm Pothier
Press Secretary
Office of the Minister of Finance
613-996-7861
Jack Aubry
Media Relations
Department of Finance
613-996-8080
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