In the 2009 Ontario Budget, the government announced proposed measures that would provide temporary solvency funding relief to Ontario registered defined benefit pension plans affected by the financial market turmoil and take steps to ensure greater transparency while helping to protect the security of pension benefits. Regulation 909 (Regulation) made under the Pension Benefits Act (PBA) has now been amended to put these changes into effect.
Summary of Solvency Funding Relief Measures and Other Changes to Regulation 909
Temporary Solvency Funding Relief Measures - The temporary solvency funding relief measures are limited to eligible plans, and are effective with the first filed valuation report with a valuation date on or after September 30, 2008 (the solvency relief report):
- The administrator of an eligible plan may elect any or all of the following solvency funding relief options:
- Defer new special payments (going concern and solvency) determined in the solvency relief report for up to one year;
- Consolidate pre-existing solvency special payments into a new five-year schedule; and
- With the consent of the members and former members, extend funding of any new solvency deficiency in the solvency relief report for up to five additional years. The consent requirements do not apply to jointly governed plans.
- If the administrator elects at least one of the above options, any gains in future solvency valuations may be used to reduce or eliminate any solvency special payments determined in the solvency relief report.
Revised Standards for Commuted Values - All plans may make use of the revised CIA commuted value standard for solvency valuations with a valuation date on or after December 12, 2008.
Contribution Holidays - For plan fiscal years ending between June 30, 2010 and December 31, 2012, contribution holidays will not be permitted unless an actuarial cost certificate that demonstrates sufficient funding excess is filed with the Superintendent. More information is available at Contribution Holidays Questions Answered.
Transfer Ratio and Commuted Values – Section 19(5) of the Regulation now applies to plans where the transfer ratio in the last filed report was less than 1.0.