Proposed solvency rules provide relief, not forgiveness

Plan sponsors would need consent from workers and retirees or letter of credit
By Angela Scappatura
|Canadian HR Reporter|Last Updated: 05/03/2009

Federally regulated defined benefit (DB) plan sponsors could find temporary relief from mounting pension costs if recently proposed solvency funding regulations are approved.

The Ministry of Finance outlined optional temporary solvency funding relief measures in early April. The proposed regulations would be available to seven per cent of the private pension plans in Canada and are designed to ease financial pressure on plan sponsors by extending the amount of time allowed to fund plans.

Under the regulations, sponsors would have the opportunity to apply for an extension of solvency funding payments from five years to 10 years.