Ottawa, June 25, 2010
2010-060

Archived - Minister of Finance Releases Final Regulations to Enhance Protection for Private Pension Plan Members

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The Honourable Jim Flaherty, Minister of Finance, today announced that the Government has finalized regulations relating to federally regulated private pension plans that will enhance protection for plan members, reduce funding volatility and modernize the rules for investments by pension funds. 

The regulations follow up on the draft regulations that were announced on May 3, 2010, and published in the Canada Gazette, Part I, on May 8, 2010 for public comment.

“These amendments reflect financial market volatility in recent years, which points to the need to enhance protection for plan members,” said Minister Flaherty. “The changes also modernize the rules for pension fund investments and give plan sponsors greater flexibility in terms of investment allocation to allow them to better manage their funding obligations.”

The amendments to the Pension Benefits Standards Regulations, 1985 include:

  • A new standard that uses average—rather than current—solvency ratios to determine minimum funding requirements. This will soften the impact of short-term market fluctuations on a plan’s solvency funding requirements.
  • Limiting contribution holidays unless the solvency ratio exceeds full funding plus a new solvency margin, set at a level of five per cent of solvency liabilities. This measure will enhance benefit security by helping to maintain a cushion of pension plan assets.
  • A modernized investment framework that removes the limits on the amounts pension plans can invest in resource and real property investments. This will offer greater latitude in building a prudent fund portfolio.

The regulations are part of the modernized federal pension framework announced on October 27, 2009. The Government intends to make additional changes to the legislative and regulatory framework in the coming months.

The Office of the Superintendent of Financial Institutions will provide guidance shortly on the implementation of the new funding rules to help plans prepare their December 2009 actuarial reports. More details can be found at www.osfi.gc.ca.

The regulations will be published in the July 7, 2010, edition of the Canada Gazette, Part II.

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For further information, media may contact:

Annette Robertson
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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