O. Regulation 329/12
made under the Pension Benefits Act came into force on November 1, 2012. The regulations provide an extension of the temporary solvency relief measures for private sector pension plans enacted by the government in 2009.
The extension of temporary solvency funding relief measures, similar to the measures introduced in 2009
, apply to the first valuation report with a valuation date on or after September 30, 2011 and before September 30, 2014. The measures include:
- Consolidating existing solvency special payments into a new five-year schedule; and
- Extending the solvency special payment to a maximum of 10 years for new solvency deficiencies determined in the report, subject to the consent of the plan members.
A filing extension to February 28, 2013 has been granted for valuation reports with a valuation date on or after September 30, 2011 and before May 31, 2012.
The 2012 solvency funding relief measures differ from those measures first announced in 2009 in the following respects:
- The ability to defer for up to one year the start of special payments required to liquidate any new going concern unfunded liability or new solvency deficiency (Option 1 under the 2009 measures) is now generally applicable for all plans. No election is required.
- A new Option 4 under the 2012 measures permits the plan administrator to elect to consolidate existing solvency special payments, including those consolidated under Option 2 but excluding special payments which were extended to a maximum of 10 years under Option 3 under the 2009 measures and excluding special payments required only by reason of section 75 of the Pension Benefits Act (i.e., on plan wind-up), into a new 5 year schedule.
- A new Option 5 under the 2012 measures permits:
- The plan administrator to elect to extend the five-year period to make solvency special payments of any new solvency deficiency to a maximum of 10 years under the 2012 measures whether or not there was a similar election under the 2009 measures. However, the 2012 election will only apply to new solvency deficiencies revealed in the new report. Therefore, if a plan administrator has elected to extend the solvency special payments under both the 2009 measures and the 2012 measures, each solvency deficiency would be liquidated over a different (but overlapping) 10 year period.
- The regulations specifically identify that the consent of eligible retired members (as well as eligible members and eligible former members) is required. Previously, eligible retired members were considered to be eligible former members.
See Questions and Answers on the 2012 Solvency Funding Relief Measures.