Ottawa, December 14, 2010
Archived - Government of Canada Moves to Strengthen the Federally Regulated Private Pension System
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- Backgrounder – Regulatory Impact Analysis Statement
- Regulations Amending Certain Regulations Made Under the Pension Benefits Standards Act, 1985
The Honourable Jim Flaherty, Minister of Finance, today proposed regulatory changes to help make federally regulated private pension plans less sensitive to financial market volatility while protecting plan members and retirees.
“These changes will help pension plan sponsors to better manage their funding obligations while providing additional protection to plan members and retirees,” said Minister Flaherty.
The proposed amendments to the Pension Benefits Standards Regulations, 1985 would:
- Permit plan sponsors to secure properly structured letters of credit in lieu of making solvency payments to the pension fund, up to a limit of 15 per cent of plan assets.
- Require plan sponsors to fully fund pension benefits on plan termination.
- Void any amendments to a pension plan that would reduce the solvency ratio of the pension plan if the plan’s solvency ratio would be below 0.85.
- Permit sponsors, plan members and retirees of a distressed pension plan to negotiate their own funding arrangements to facilitate a plan restructuring.
These proposed changes to federally regulated private pension plans implement elements of the Government’s modernized federal pension framework announced on October 27, 2009, which enhances protection for plan members, reduces funding volatility, makes it easier to negotiate changes to pension arrangements and modernizes the rules for investments made by pension funds.
“These changes are part of the Government of Canada’s overall commitment to maintain a strong retirement income system for Canadians,” said Minister Flaherty, noting these changes are a federal initiative and do not apply to provincially regulated pension plans.
The amendments are being released today for public comment. The official pre-publication in the Canada Gazette will be on December 18, 2010. At that time, interested persons may make representations on the proposed amendments within 30 days, prior to final consideration by the Government.
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
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