Incremental Normal Cost (“NC”) and the associated PfAD | - Incremental NC and its associated PfAD (reflecting PfAD in last valuation filed with FSCO).
| - If the plan sponsor wants to apply available actuarial surplus to reduce the funding of the Incremental NC and its associated PfAD, it can do so by following the rules for a contribution holiday under the PBA and the Regulation(b).
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Incremental Going-concern (“GC”) Liability | - 8 year amortization of Incremental GC Liability (no PfAD application) in excess of any upfront contributions (to get over the thresholds under section 3.0.1(1) of the Regulation), commencing immediately from the valuation date.
| - If the plan sponsor wants to apply some or all GC surplus to offset the funding of the Incremental GC Liability (in excess of any upfront contributions), FSCO expects the following conditions to be satisfied:
i. Prior to the plan amendment, the plan sponsor is not required to make any GC or solvency special payments; and
ii. The actuary can demonstrate that the plan has a GC surplus immediately before any top up contributions (for this purpose, an
updated PfAD and asset data as at the valuation date must be used). - As a result, FSCO expects the Incremental GC Liability to be offset by (i) any upfront contributions (to get over the thresholds under section 3.0.1(1) of the Regulation or otherwise made in respect of the amendment) and (ii) the lesser of the GC surplus as at the last filed report(c) and the updated GC surplus (established above); the resulting amount must be amortized over no more than 8 years.
- If the actuary believes that the funded position of the plan has improved, the plan administrator always has the option of filing a section 3 report in the form of a complete valuation report (which may also be filed as a section 14 report).
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Incremental Solvency Liability | - 5 year amortization of 85% of Incremental Solvency Liability reduced by any upfront contributions (to get over the thresholds under section 3.0.1(1) of the Regulation) and the present value of any special payments in relation to the Incremental GC Liability established above for the same period, commencing no later than 12 months from the valuation date.
| - If the plan sponsor wants to eliminate the funding requirement with respect to the Incremental Solvency Liability, then FSCO expects the following conditions to be satisfied:
i. Prior to the plan amendment, the plan sponsor is not required to make any GC or solvency special payments; and
ii. The actuary can demonstrate that the plan does not have a reduced solvency deficiency immediately after the plan amendment by using updated asset and market data. - If the actuary believes that there is no reduced solvency deficiency as at the valuation date, after taking the plan amendment into account, the plan administrator always has the option of filing a section 3 report in the form of a complete valuation report (which also may be filed as a section 14 report) in order to avoid solvency special payments.
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