Archived - Regulations Amending Certain Regulations made under the Pension Benefits Standards Act, 1985

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PENSION BENEFITS STANDARDS REGULATIONS, 1985

1. (1) The definitions "actuarial gain", "experience gain" and "experience loss" in subsection 2(1) of the Pension Benefits Standards Regulations, 19851 are repealed.

(2) The definitions "solvency ratio" and "special payment" in subsection 2(1) of the Regulations are replaced by the following:

"solvency ratio" means

(a) for a plan that is a defined contribution plan that does not have defined benefit provisions, and an insured plan, one; and

(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 upon the most recent actuarial report filed with the Superintendent under section 12 of the Act; (ratio de solvabilité)

"special payment" means a payment or one of a series of payments determined in accordance with section 9 and made for the purpose of liquidating an unfunded liability or a solvency deficiency; (paiement spécial)

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

"adjusted solvency asset amount" means the amount determined by multiplying the average solvency ratio by the amount of the solvency liabilities; (montant rajusté de l'actif de solvabilité)

"average solvency ratio" means the solvency ratio determined in accordance with subsections 9(8) to (11); (ratio de solvabilité moyen)

"going concern deficit" means the amount by which the going concern liabilities exceed the going concern assets; (déficit évalué sur une base de permanence)

"going concern excess" means the amount by which the going concern assets exceed the going concern liabilities; (excédent évalué sur une base de permanence)

"going concern special payment" means a payment made in respect of an unfunded liability under subsection 9(3); (paiement spécial de permanence)

"prior valuation date" in relation to a valuation date, means the day one year prior to that valuation date; (date d'évaluation antérieure)

"prior second valuation date" in relation to a valuation date, means the day two years prior to that valuation date; (deuxième date d'évaluation antérieure)

"solvency assets" means the market value of the assets that relate to the defined benefit provisions of a plan minus the estimated expense of the winding-up of the plan as certified by an actuary; (actif de solvabilité)

"solvency deficiency" means the amount by which the solvency liabilities exceed the adjusted solvency asset amount; (déficit de solvabilité)

"solvency excess" means the amount by which the adjusted solvency asset amount exceeds the solvency liabilities; (excédent de solvabilité)

"solvency liabilities" means the liabilities of a plan that relate to defined benefit provisions and are determined on the basis that the plan is terminated; (passif de solvabilité)

"solvency special payment" means a payment made under paragraph 9(4)(c) or (d); (paiement spécial de solvabilité)

"valuation date" means the date on which the actuarial report values the liabilities of a plan; (date d'évaluation)

2. (1) Section 9 of the Regulations is replaced by the following:

9. (1) In this section "unfunded liability" means

(a) the going concern deficit of a plan as determined on the date that the plan was established;

(b) the amount by which an increase in the going concern liabilities of a plan resulting from an amendment to the plan exceeds the going concern excess of the plan as determined on the day before the effective date of the amendment; or

(c) the amount by which the going concern deficit of a plan determined at the valuation date exceeds the present value of going concern special payments of the plan established in respect of periods after the valuation date.

(2) For the purposes of this section

(a) the date of emergence of an unfunded liability in respect of an occurrence described in

(i) paragraph (1)(a) is the effective date of the plan,

(ii) paragraph (1)(b) is the effective date of the amendment, and

(iii) paragraph (1)(c) is the valuation date;

(b) the date of emergence of a solvency deficiency is the date of the valuation that identified the deficiency; and

(c) the interest rate used to determine the present value of going concern special payments referred to in paragraph (1)(c) is the same as the interest rate used to determine the going concern liabilities of the plan at the valuation date.

(3) An unfunded liability of a plan shall be funded by going concern special payments sufficient to liquidate the unfunded liability by equal annual payments over a period of 15 years from the date on which the unfunded liability emerged.

(4) A plan shall be funded in each plan year as follows:

(a) by a contribution equal to the normal cost of the plan,

(b) by going concern special payments;

(c) if there is a solvency deficiency, by annual solvency special payments equal to the amount by which the solvency deficiency divided by 5 exceeds the amount of going concern special payments that are payable during the plan year;

(d) if there is an additional solvency deficiency referred to in subsection (12), by additional annual solvency special payments payable from the effective date of the amendment and equal to the amount by which the additional solvency deficiency divided by 5 exceeds the going concern special payment in respect of the unfunded liability emerging from the amendment to the plan; and

(e) by an amount required to be paid by an employer under a defined contribution provision.

(5) The amount required under paragraph (4)(a) or (e) may be reduced by all or a portion of the lesser of

(a) the going concern excess, and

(b) the amount by which the solvency assets exceed the solvency liabilities multiplied by 1.05.

(6) If an unfunded liability or solvency deficiency is liquidated at a rate greater than the sum of the special payments required under paragraph (4)(b),(c) or (d) by the making of an additional payment, the amount of a special payment for a subsequent plan year may be reduced if the outstanding balance of an unfunded liability will at no time be greater than it would have been had the going concern special payments been made.

(7) If the aggregate of the present value of going concern special payments referred to in paragraph (1)(c) exceeds the going concern deficit, this excess shall be applied to reduce the outstanding balance of any unfunded liability and the going concern special payments remaining to be made in respect of the unfunded liability shall be reduced pro rata.

(8) The average solvency ratio for a valuation date is the arithmetic average of the solvency ratios at the valuation date, the prior valuation date and the prior second valuation date adjusted as follows:

(a) the solvency ratio at the valuation date shall be adjusted to remove the effect of any amendment made after the second prior valuation date that retroactively increases the plan benefits;

(b) the solvency ratio at the prior valuation date shall be adjusted to remove the effect of any amendment made after the second prior valuation date and before the prior valuation date that retroactively increases the plan benefits;

(c) the solvency ratios at the prior valuation date and the prior second valuation date may be adjusted to increase the solvency assets by an amount not in excess of the present value of any special payment made between the prior valuation date and the valuation date, or between the second prior valuation date and the valuation date, as the case may be, but not including a special payment made under subsection (6) that will be applied to reduce special payments in respect of periods after the valuation date;

(d) if an adjustment is made under paragraph (c), the solvency ratio at the valuation date shall be adjusted by reducing the solvency assets at the valuation date by the amount of a special payment made under subsection (6) referred to in paragraph (c);

(e) the solvency ratios at the prior valuation date and the prior second valuation date shall be adjusted to reduce the solvency assets by the present value of any reduction made in accordance with subsection (5) or subsection (7.1) as that subsection read immediately before this section comes into force, between the prior valuation date and the valuation date or between the second prior valuation date and the valuation date, as the case may be; and

(f) the solvency ratios at the prior valuation date and the prior second valuation date shall be adjusted to reflect the transfer into the plan of the assets of another plan between the prior valuation date and the valuation date or between the second prior valuation date and the valuation date, as the case may be, by including the assets of the transferring plan as solvency assets and the liabilities of the transferring plan as solvency liabilities.

(9) The average solvency ratio shall be adjusted to include the effect at the valuation date of any amendments referred to in paragraph (8)(a) or (b).

(10) The interest rate used to determine the present value of the special payments referred to in paragraphs (8)(c) and (e) shall be the same interest rate that was used to determine the solvency liabilities of the plan on the day on which the solvency ratio is adjusted.

(11) The solvency ratio at the valuation date may be used as the solvency ratio for a prior valuation date or prior second valuation date in respect of which no report was filed for the plan in accordance with subsection 12(3) of the Act.

(12) An additional solvency deficiency resulting from an amendment to the plan is equal to the amount by which the increase in solvency liabilities determined in accordance with subsection (13) exceeds the solvency excess at the day before the effective date of the amendment.

(13) If an amendment to the plan increases the solvency liabilities, the solvency liabilities shall be valued using the actuarial assumptions and methods used in the solvency valuation of the actuarial report filed or due to be filed under subsection 12(3) of the Act at the end of the most recent plan year concurrent to or prior to the effective date of the amendment.

(14) Payments to a plan shall be made as follows:

(a) the normal cost of the plan shall be paid in equal instalments or as an equal percentage of the anticipated remuneration to be paid to the members during the plan year and shall be paid not less frequently than quarterly and not later than 30 days after the end of the quarter in respect of which the instalment is paid;

(b) any special payment to be made during the plan year shall be paid not less frequently than quarterly and not later than 30 days after the end of the quarter in respect of which the instalment is paid;

(c) the contributions of plan members shall be remitted to the administrator not later than 30 days after the end of the period in respect of which such contributions were deducted; and

(d) the administrator shall immediately pay into the fund any amount remitted to the administrator.

(2) Paragraphs 9(14)(a) and (b) of the Regulations are replaced by the following:

(a) the normal cost of the plan shall be paid in equal instalments or as an equal percentage of the anticipated remuneration to be paid to the members during the plan year and 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 instalment is paid;

(b) any special payment to be made during the plan year 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 instalment is paid;

3. Section 10 of the Regulations is replaced by the following:

10. (1) An administrator who fails to pay into the fund any amount remitted to the administrator under subsection 9(14) is liable to the plan for the outstanding payment and interest on it.

(2) If an employer fails to make payments to the plan at the times set out in subsection 9(14) or fails to make payments in accordance with subsection 29(6) of the Act or if the administrator is liable under subsection (1), the interest rate shall be

(a) in respect of a going concern special payment, the one used to determine the going concern liabilities;

(b) in respect of a solvency special payment, the one used to determine the solvency liabilities;

(c) in respect of a normal cost, the one applicable in paragraph (a); and

(d) in respect of any other payments, the one applicable in paragraph (b).

4. Paragraphs 11(3)(c) and (d) of the Regulations are replaced by the following:

(c) the outstanding amount of unfunded liabilities existing on the date as of which the report is prepared and the special payments to be made in accordance with paragraph 9(4)(b);

(d) a certification that the plan does not have a solvency deficiency or a determination of the solvency deficiency of the plan and the special payments to be made in accordance with paragraph 9(4)(c); and

5. Section 10 of Schedule III to the Regulations is repealed.

SOLVENCY FUNDING RELIEF REGULATIONS

6. Subsection 6(4) of the Solvency Funding Relief Regulations2 is replaced by the following:

(4) Despite the fact that the special payments set out in subsection (1) may be made over a period that exceeds the period applicable under Part 1, for the purposes of subsection 8(1) of the Act, the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with that Part from the day on which the initial solvency deficiency emerged, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall be considered to be an amount accrued to the pension fund.

7. Subsection 7(2) of the Regulations is replaced by the following:

(2) If the funding is for an initial solvency deficiency of a multi-employer pension plan and if the annual amount of payments required to be made to the pension fund under subsection (1) is less than the aggregate amount of payments that are required to be made to the pension fund, excluding the normal cost and the special payments required to liquidate an unfunded liability, under all applicable collective agreements, the amount of payments required to be made to the pension fund in accordance with this Part shall be the aggregate amount of payments required to be made to the pension fund pursuant to all applicable collective agreements.

8. Section 12 of the Regulations is replaced by the following:

12. (1) Despite section 9 of the Pension Benefits Standards Regulations, 1985, a solvency deficiency that emerges after the day on which the initial solvency deficiency emerged shall be calculated as the amount by which the solvency liabilities exceed the adjusted solvency asset amount and the present value of any series of special payments referred to in section 6 or 7 that expires more than five years after the valuation date.

(2) The interest rate used to determine the present value of the special payments referred to in subsection (1) is the same as the interest rate used to determine the solvency liabilities.

9. (1) Subparagraphs 17(1)(a)(ii) to (iv) of the Regulations are replaced by the following:

(ii) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with Part 1 from the day on which the initial solvency deficiency emerged to the day on which funding ceases, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund, and

(2) Subparagraph 17(1)(b)(ii) of the Regulations is replaced by the following:

(ii) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with Part 1 from the day on which the initial solvency deficiency emerged to the day on which funding ceases, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund.

(3) Subsection 17(2) of the Regulations is repealed.

10. Section 22 of the Regulations is replaced by the following:

22. If the face amount of letters of credit obtained or maintained in accordance with this Part for a plan year is less than the amount required by subsection 19(2) for that plan year, the employer shall make up the difference either by increasing the amount of letters of credit or by making additional payments to the pension fund no later than on the day on which the next payment is made to the pension fund in accordance with subsection 9(14) of the Pension Benefits Standards Regulations, 1985.

11. Section 27 of the Regulations is replaced by the following:

27. (1) Despite section 9 of the Pension Benefits Standards Regulations, 1985, a solvency deficiency that emerges after the day on which the initial solvency deficiency emerged shall be calculated as the amount by which the solvency liabilities exceed the adjusted solvency asset amount and the present value of any series of special payments referred to in section 19 that expires more than five years after the valuation date.

(2) The interest rate used to determine the present value of the special payments referred to in subsection (1) is the same as the interest rate used to determine the solvency liabilities.

12. Subsection 29(1) of the Regulations is replaced by the following:

29. (1) If a default occurs, the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with Part 1 from the day on which the initial solvency deficiency emerged, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund.

13. Paragraph 30(b) of the Regulations is replaced by the following:

(b) the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with Part 1 from the day on which the initial solvency deficiency emerged, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, is remitted to the pension fund at least 30 days before the plan's year end; and

SOLVENCY FUNDING RELIEF REGULATIONS, 2009

14. Subsection 5(6) of the Solvency Funding Relief Regulations, 20093 is replaced by the following:

(6) If the funding is for a deficiency of a multi-employer pension plan and if the annual amount of the payments required to be made to the pension fund in accordance with subsection (2) or (3), as the case may be, is less than the aggregate amount of the payments that are required to be made to the pension fund, excluding the normal cost and the special payments required to liquidate an unfunded liability, under all applicable collective agreements, the amount of the payments required to be made to the pension fund in accordance with subsection (2) or (3), as the case may be, shall be the aggregate amount of the payments required to be made to the pension fund under all applicable collective agreements and subsection (4) shall not apply.

15. Subsections 8(2) and (3) of the Regulations are replaced by the following:

(2) In respect of the 2009 plan year, the solvency deficiency and solvency special payments shall be determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985.

16. Section 14 of the Regulations is replaced by the following:

14. (1) If this Part applies and despite section 9 of the Pension Benefits Standards Regulations, 1985, a solvency deficiency that emerges after the day on which the initial solvency deficiency emerged shall be calculated as the amount by which the solvency liabilities exceed the adjusted solvency asset amount and the present value of any series of special payments referred to in section 5 that expires more than five years after the valuation date.

(2) The interest rate used to determine the present value of the special payments referred to in subsection (1) is the same as the interest rate used to determine the solvency liabilities.

17. (1) Subparagraphs 19(1)(a)(ii) to (iv) of the Regulations are replaced by the following:

(ii) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with section 9 of the Pension Benefits Standards Regulations, 1985 from the day on which the deficiency emerged to the day on which funding ceases, as adjusted to take into account the reductions in special payments resulting from the application of those Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with Part 1 and this Part, plus interest, shall immediately be remitted to the pension fund, and

(2) Subparagraph 19(1)(b)(ii) of the Regulations is replaced by the following:

(ii) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with section 9 of the Pension Benefits Standards Regulations, 1985 from the day on which the deficiency emerged to the day on which funding ceases, as adjusted to take into account the reductions in special payments resulting from the application of those Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with Part 1 and this Part, plus interest, shall immediately be remitted to the pension fund.

(3) Subsection 19(2) of the Regulations is repealed.

18. Section 24 of the Regulations is replaced by the following:

24. If the face amount of letters of credit obtained or maintained in accordance with this Part for a plan year is less than the amount required by subsection 21(3) for that plan year, the employer shall make up the difference either by increasing the amount of letters of credit or by making additional payments to the pension fund no later than on the day on which the next payment is made to the pension fund in accordance with subsection 9(14) of the Pension Benefits Standards Regulations, 1985.

19. Section 29 of the Regulations is replaced by the following:

29. (1) Despite section 9 of the Pension Benefits Standards Regulations, 1985, a solvency deficiency that emerges after the day on which the initial solvency deficiency emerged shall be calculated as the amount by which the solvency liabilities exceed the adjusted solvency asset amount and the present value of any series of special payments referred to in section 21 that expires more than five years after the valuation date.

(2) The interest rate used to determine the present value of the special payments referred to in subsection (1) is the same as the interest rate used to determine the solvency liabilities.

20. Subsection 31(1) of the Regulations is replaced by the following:

31. (1) If a default occurs, the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with section 9 of the Pension Benefits Standards Regulations, 1985 from the day on which the deficiency emerged, as adjusted to take into account the reductions in special payments resulting from the application of those Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with Part 1 and this Part, plus interest, shall immediately be remitted to the pension fund.

21. Paragraph 32(b) of the Regulations is replaced by the following:

(b) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with section 9 of the Pension Benefits Standards Regulations, 1985 from the day on which the deficiency emerged, as adjusted to take into account the reductions in special payments resulting from the application of those Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with Part 1 and this Part, plus interest, is remitted to the pension fund at least 30 days before the plan's year end; and

TRANSITIONAL PROVISIONS

22. A plan may continue to be funded under section 9 of the Pension Benefits Standards Regulations, 1985, as they read immediately before this section comes into force, until the day on which the first actuarial report is required to be filed after this section comes into force.

23. A reference to an "unfunded liability" in these Regulations includes a reference to an "initial unfunded liability" as defined in subsection 9(1) of the Pension Benefits Standards Regulations, 1985, as that definition read immediately before this section comes into force.

24. (1) For the purpose of determining the average solvency ratio for the first actuarial report required to be filed after this section comes into force, the solvency ratio, that is determined on the valuation date, without the adjustments made under subsection 9(8), may be used as the solvency ratio for

(a) the prior valuation date and the prior second valuation date; or

(b) the prior second valuation date.

(2) If the average solvency ratio is determined under paragraph (1)(a), the "solvency assets" means the value of the assets of the plan, determined on the basis of market value or of a value related to the market value by means of a method using market values over a period of not more than five years to stabilize short-term fluctuations.

(3) For the purpose of determining the average solvency ratio for the second actuarial report required to be filed after this section comes into force, if the average solvency ratio for the first actuarial report was determined under paragraph (1)(a), the solvency ratio for the prior second valuation date shall be the solvency ratio at the valuation date.

25. These Regulations do not apply to a plan to which the Canadian Press Pension Plan Solvency Deficiency Funding Regulations apply.

COMING INTO FORCE

25. (1) These Regulations, other than subsection 2(2), come into force on the day on which they are registered.

(2) Subsection 2(2) comes into force on January 1, 2011.


1 SOR/87-19
2 SOR/2006-275
3 SOR/2009-182