Final amendments to Pension and Benefits Standards Regulations, 1985, have been released by federal Minister of Finance Jim Flaherty.
The regulatory amendments that will come into force on April 1, 2011, would:
•permit plan sponsors to secure properly structured letters of credit in lieu of making solvency payments to the pension fund, up to a limit of 15 per cent of plan assets
•require the plan sponsor to fully fund pension benefits on plan termination
•void any amendments to a pension plan that would reduce the solvency ratio of the pension plan if the plan’s solvency ratio would be below a ratio of 0.85
•permit sponsors, plan members and retirees of a distressed pension plan to negotiate their own funding arrangements to facilitate a plan restructuring.
“These changes will help pension plan sponsors to better manage their funding obligations while providing additional protection to plan members and retirees,” said Flaherty.
These improvements build on the federal government’s reform plan, announced in October 2009, which enhances protection for plan members, reduces funding volatility, makes it easier to negotiate changes to pension arrangements and modernizes the rules for investments made by pension funds, said Flaherty.
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