Asset Transfer FAQs - Actuarial

Q1. As of what date are the asset transfer reports to be prepared?
 
A1. The asset transfer reports are to be prepared as of the effective date of the asset transfer.  -12/2014
 
 
Q2. Are the asset transfer reports to be full actuarial valuation reports?
 
A.2. The asset transfer reports are to include all required disclosures under section 14 of Regulation 909 in addition to the requirements under Schedule 1 subsection 1(1) or Schedule 2 subsection 1(1) of O. Reg. 310/13, as applicable.  As long as the asset transfer reports contain the required disclosures as set out in the Schedules, the asset transfer reports may be prepared as part of required actuarial valuation report filings, or the reports may be reports prepared solely for the purpose of the asset transfer.  -12/2014
 
 
Q.3. If the asset transfer application is made under section 80 of the Pension Benefits Act (PBA), can the asset transfer reports for the original pension plan and the successor pension plan be combined into one report?
 
A.3. Yes.  Schedule 1, subsection 1(2) of O. Reg. 310/13 permits the asset transfer reports to be combined if all of the assets and liabilities of the original pension plan will be transferred, and the successor pension plan will provide the same benefits for the transferred members that were provided for them under the original pension plan.  -12/2014
 
 
Q.4. If the asset transfer application is made under section 81 of the Pension Benefits Act (PBA), can the asset transfer reports for the original pension plan and the successor pension plan be combined into one report?
 
A.4. Schedule 2 of O. Reg. 310/13 does not contain a provision similar to that found in Schedule 1 with respect to the filing of a combined asset transfer report.  However, FSCO would accept a combined report if all of the assets and liabilities of the original pension plan will be transferred, and the successor pension plan will provide the same benefits for the transferred members that were provided for them under the original pension plan.  -12/2014
 
 
Q.5. What are the special payments referred to in section 9(3) “E” of O. Reg. 310/13?
 
A.5. The special payments referred to in section 9(3) “E” of O. Reg. 310/13 are the payments the original pension plan is required to pay under section 5(1) of Regulation 909.  -09/2015
 
 
Q.6. In a partial asset transfer, how are the special payments in respect of the transferred liabilities to be disclosed in the asset transfer report for the original pension plan?
 
A.6. The asset transfer report for the original pension plan should indicate all special payments required to fund that plan.  If only part of the original pension plan will be transferred, then the report must also identify the portion of the special payments that relate to the transferring liabilities and the portion that relates to the remainder of the plan.  -12/2014
 
 
Q.7. Prior to the actual asset transfer, which employer (original or successor) should be making the special payments in respect of the transferred liabilities after the effective date of the transfer, to which pension plan and for how long?
 
A.7. The original employer should continue to make special payments to the original pension plan in respect of all original pension plan liabilities until the asset transfer actually occurs.  Only when the Superintendent has approved the asset transfer and the assets have actually been transferred can the original employer stop making special payments in respect of the transferred liabilities.  -12/2014
 
 
Q.8. What amount of special payments should the original employer be making to the original pension plan?
 
A.8. The original employer should continue to make special payments to the original pension plan in respect of all original pension plan liabilities based on the asset transfer report, and any subsequent reports filed under section 3, 4 or 14 after the effective date of the transfer.  -12/2014
 
 
Q.9. Prior to the actual asset transfer, should the successor employer be making special payments in respect of the transferred liabilities to the successor pension plan?
 
A.9. No.  Special payments in respect of the transferred liabilities are not to be made to the successor pension plan until the Superintendent has approved the asset transfer and the assets have actually been transferred.  Once the assets are actually transferred, the successor employer will, if necessary, begin making special payments in respect of the transferring assets and liabilities in accordance with the asset transfer report. –12/2014
 
 
Q.10. What happens if the special payments in respect of the transferring liabilities being made to the original pension plan from the effective date of transfer to the date on which the assets are actually transferred are insufficient to cover any required special payments set out in the asset transfer report for the successor pension plan?
 
A.10. If the special payments being made to the original pension plan in respect of the transferring liabilities are insufficient to cover any required special payments set out in the asset transfer report for the successor pension plan, the successor employer is required to contribute the difference accumulated with interest. –12/2014
 
 
Q.11. As of what date is the amount “X” in the formula in section 9(1) of O. Reg. 310/13 to be calculated?
 
A.11. All amounts included in “X” in the formula “(X+Y) – Z” found in section 9(1) of O. Reg. 310/13 are determined as of the effective date of the transfer of assets.  -12/2014
 
 
Q.12. Are the amounts for “Y” and “Z” in the formula in section 9(1) of O. Reg. 310/13 to be included in the asset transfer report?
 
A.12. The reports prepared under Schedules 1 and 2 of the Asset Transfer Regulation are as of the effective date of transfer.  Therefore, the amounts for “Y” and “Z” may be excluded in those reports as they will be zero as of that date.  However, any subsequent valuation report prepared for either the original pension plan or the successor pension plan before the actual date the assets are transferred should provide details as to the values of “Y” and “Z” as of the valuation date of that report.  -12/2014
 
 
Q.13. Does the Superintendent need to approve the amounts calculated for “Y” and “Z” in the formula in section 9(1) of O. Reg. 310/13?
 
A.13. No.  The Superintendent does not need to approve the amounts calculated for “Y” and “Z” in the formula in section 9(1) of O. Reg. 310/13.  However, under subsection 79.2(15) of  Regulation 909, the Superintendent may require the administrator of the successor pension plan to return to the original pension plan any assets, along with prescribed interest, that were transferred in contravention of the Pension Benefits Act and Regulations.  -12/2014 
 
 
Q.14. As of what date must the solvency ratio test under section 10 of O. Reg. 310/13 on the successor pension plan be performed?
 
A.14. The solvency ratio test must be performed as of the effective date of the asset transfer.  Therefore, any contribution that may be required in order to satisfy the solvency ratio test will be determined as of the effective date of the asset transfer.  -12/2014   
 
 
Q.15. If a contribution to the successor pension plan is required in order to satisfy the solvency ratio test under section 10 of O. Reg. 310/13, when should this contribution be made?
 
A.15. The contribution, determined as of the effective date of the transfer accumulated with interest from the effective date of the asset transfer to the date the assets are actually transferred, should be made to the successor pension plan coincident with the date the assets are actually transferred.  The interest rate applied should be the solvency interest rate at the effective date of the transfer.  -12/2014
 
 
Q.16. Are the “solvency assets” and “solvency liabilities” referred to in section 9(2) of O. Reg. 310/13 the same as those defined in section 1(2) of Regulation 909?
 
A.16. Yes, the “solvency assets” and “solvency liabilities” referred to in section 9(2) of O. Reg. 310/13 are the same as the ones defined in section 1(2) of Regulation 909.  This is indicated in section 2(1) of O. Reg. 310/13.  -12/2014
 
 
Q.17. Can the assets transferred in a full or partial asset transfer from the original pension plan include letters of credit?
 
A.17. No.  The actual assets to be transferred in a full or partial asset transfer cannot include letters of credit.  Letters of credit held as of the effective date of the transfer would be included in the determination of the amount of assets to be transferred under section 9 of O. Reg. 310/13; however, the letter of credit cannot form part of the actual assets to be transferred.  An additional contribution to the original pension plan may be required to replace the assets being transferred which are covered by the letter of credit.  -12/2014
 
 
Q.18. Can a letter of credit be used by the successor employer in lieu of a cash contribution to satisfy the post-transfer solvency ratio test?
 
A.18. No.  A letter of credit cannot be used in lieu of a cash contribution required to satisfy the solvency ratio criteria under section 10 of O. Reg. 310/13.  Section 55.2 of Regulation 909 permits letters of credit to satisfy special payments only with respect to a solvency deficiency.  This cash contribution would not be satisfying any special payments required to be made toward a solvency deficiency determined in accordance with section 1.3.1 of Regulation 909.  -12/2014
 
 
Q.19. If the original pension plan has a Prior Year Credit Balance (PYCB), can the PYCB be carried over from the original pension plan to the successor pension plan?
 
A.19. The solvency assets as defined in O. Reg. 310/13 would include the PYCB.  Therefore, the asset transfer value determined under section 9 of O. Reg. 310/13 would include a pro-rata share of the PYCB.  The PYCB under the original pension plan would be reduced by the pro-rata amount transferred to the successor pension plan.  The successor pension plan could retain the PYCB that was transferred in, or apply the PYCB to required contributions in accordance with section 5(6) of Regulation 909.  -12/2014 

 
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