2012 Solvency Funding Relief Measures for Private Sector Pension Plans - Frequently Asked Questions (FAQs)

This web page provides answers to questions on the amendments to Regulation 909 [New Window] regarding the 2012 Solvency Funding Relief Measures and Other Changes to Regulation 909 that were announced in the 2012 Ontario Budget.  These changes came into force on November 1, 2012 and are set out in Regulation 329/12 [New Window], which was made under the Pension Benefits Act (PBA).
These questions relate to:
 
 

Filing Deadlines and Elections

 
Q1:  The plan administrator made an election under the 2009 solvency funding relief measures.  Does a new election have to be filed with the Superintendent in order to take advantage of the 2012 solvency funding relief measures?
 
A1:  Yes.  A new election needs to be filed with the Superintendent for the 2012 solvency funding relief measures in order to make use of option(s) 4 and/or 5.  -11/12
 
Q2: How should the election for the 2012 solvency funding relief measures be filed with the Superintendent?  In what form does it need to be submitted, and what information should be included?
 
A2: The plan administrator needs to file a notice of election with the Superintendent.  The notice of election must be in writing, and may be in the form of a separate letter to the Superintendent, or it may be part of the cover letter that accompanies the solvency relief report that is filed with the Superintendent.  The election must be filed on or before the filing of the first valuation report under section 13 or 14 with a valuation date on or after September 30, 2011 and before September 30, 2014.  The notice of election should be signed by either the plan administrator, or an individual who is authorized to sign the election on behalf of the administrator. 
 
The notice of election must include the following:
 
  • Name of the pension plan
  • Plan registration number
  • A statement that an election is being made to implement [insert description of the option(s) elected)], and is effective as of [insert effective date of implementation]. -11/12
Q3:  An earlier regulation amendment provided a filing extension to December 31, 2012, for a valuation report with a valuation date that was on or after September 30, 2011 and before March 31, 2012.  Does the administrator still have to file the plan’s valuation report by December 31, 2012?
 
A3:  No.  Under the 2012 solvency funding relief measures, the administrator has until February 28, 2013 to file the first report that has a valuation date on or after September 30, 2011 and before May 31, 2012.  -11/12
 
Q4:  Why do the regulations no longer contain the option to defer, 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 solvency funding relief measures)?
 
A4:  This deferral option is now available to all plans.  No specific election is required.  However, if a plan chooses to use a deferral period, the deferral must be disclosed in the pension plan’s valuation report.  -11/12
 
Q5:  If the first valuation report is required as a result of a plan amendment, can a plan administrator make an election related to the temporary solvency relief options at the same time?
 
A5:  Yes, but only if the plan administrator files a full valuation report under section 14 as a result of the plan amendment.  An election can only be made in conjunction with the plan’s first valuation report filed by the administrator under section 13 or section 14.   A report filed under section 3 is not considered to be a solvency relief report and cannot support an election of solvency relief options. The solvency relief election must be submitted to the Superintendent in writing on or before the date the section 14 report is filed. -11/12
 
Q6: If the plan administrator does not wish to make an election for the plan’s first filed report, can an election be made in a subsequent valuation report?
 
A6:  No.  An election can only be made for the plan’s first valuation report filed under section 13 or 14 with a valuation date that is on or after September 30, 2011 and before September 30, 2014.  -11/12
 
 

Plan Administrator Questions

 
Q7:  The plan administrator elected options under the 2009 rules.  Are there any restrictions on the options the plan administrator can elect under the 2012 solvency relief measures?
 
A7:  The plan administrator is eligible to make an election under the 2012 solvency relief measures, if:

  1. the plan is not an excluded plan; and
  2. the plan has either a new and/or an existing solvency deficiency in its first valuation report that falls within the period specified by Regulation 329/12. The administrator could make an election under option 5 for a new solvency deficiency, or under option 4 for an existing solvency deficiency. 
Please note that the election under option 4 does not apply to:
 
  • any special payments that were extended to a maximum of 10 years under option 3 in the 2009 measures, or
  • to any special payments required on a plan wind-up (under section 75 of the PBA). 

In addition, the election under option 5 is only available if the administrator complies with the notice requirements described in the Regulation. (This does not apply to jointly governed plans).  -11/12

 
Q8:  What special payments may be consolidated in the solvency relief report under option 4?
 
A8:  The solvency relief report may consolidate only the present value of any remaining solvency special payments relating to solvency deficiencies that arose before the valuation date of the solvency relief report that remain to be paid.  Pre-existing special payments relating to going-concern unfunded liabilities and special payments required under section 75 of the PBA are not included.  If solvency special payments were previously consolidated under option 2 of the 2009 rules, they can be reconfigured into a new five year schedule.  However, solvency special payments that are subject to the 2009 extended funding rules (option 3) cannot be consolidated.  -11/12
 
RevisedQ9:  When do the accelerated funding rules for plan amendments end if the administrator elects option 4, 5 or both?
 
A9:  If the plan administrator elects option 4, 5 or both and the plan is later amended to increase benefits, any increase in the going concern unfunded liability must be liquidated over five years. The only exception is if the plan amendment has an effective date after the later of:
 
  • the date the consolidated prior solvency deficiency is liquidated; and
  • the date on which the remainder of the extended liquidation period equals five years.
For example, a plan administrator files a 2012 solvency relief report with a valuation date of January 1, 2013.  The administrator elected option 4, 5 or both (with the maximum extension), but did not defer the start of special payments (previously option 1). The new solvency special payments are scheduled to end on December 31, 2022 and the consolidated prior solvency deficiency payments are scheduled to end on December 31, 2017. Note that the accelerated funding rules would not apply if the effective date of the benefit improvement is later than December 31, 2022.   -06/2017 
 
 

Member/Former Member Questions 

 
Q10:  Who is an eligible former member?
 
A10:  In relation to the pension plan, an “eligible former member” is a former member whose deferred pension or pension benefit includes a defined benefit.  It does not include a former member who has died, and for whom a notice of death has been received by the plan administrator.  -11/12
 
Q11:  Who is an eligible retired member?
 
A11:  In relation to the pension plan, an “eligible retired member” is a retired member who is in receipt of a pension, and whose pension or pension benefit includes a defined benefit.  It does not include a retired member who has died, and for whom a notice of death has been received by the plan administrator.  -11/12

Q12:  As a widow(er) of a former/retired member of a pension plan I am a beneficiary under the plan.  Am I entitled to receive enhanced notice, if the plan makes an election under the solvency relief amendments?
 
A12:  No.  Only eligible members, eligible former members, and eligible retired members are entitled to receive enhanced notice.  -11/12
 
Q13:  I am an eligible member of a pension plan and previously gave my consent for the administrator to elect option 3.  I was recently asked to provide my consent to allow the administrator to elect option 5 under the 2012 solvency relief measures.  If I agree, will I now receive separate enhanced notices and progress reports for both elections?
 
A13: Yes.  However, the administrator may provide the information for both elections in a single document. The document will clearly identify the information for the election under option 3 and the election under option 5.  -11/12
 
Q14: I am an eligible retired member of a pension plan and a union member.  I have been asked to provide my consent to allow the administrator to elect option 5 (the extension of the new solvency deficiency funding period from five years to not more than 10 years).  Can the union exercise my vote?
 
A14: No. The union can only vote on behalf of individuals who were eligible members for whom the union acts as collective bargaining agent on the valuation date of the solvency relief report.  If you retired after the date of the solvency relief report, the union may vote on your behalf.  If you retired on or before the date of the solvency relief report, you must vote directly. -11/12
 
Q15:  I am an eligible member of a pension plan that covers both union and non-union members.  I am not a member of a union.  I have been asked to provide my consent to allow the administrator to elect option 5 (the extension of the new solvency deficiency funding period from five years to not more than 10 years).  Can the union exercise my vote?
 
A15: No. The union can only vote on behalf of individuals who were eligible members for whom the union acts as collective bargaining agent on the valuation date of the solvency relief report.  -11/12
 

 
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