Allows 1-time consolidation of deficiencies for DB plan sponsors
In response to the decline of solvency discount rates, the government of Alberta has introduced short-term funding relief provisions to the Employment Pension Plan Regulation.
These new provisions are intended to assist plan sponsors with the financial pressures associated with funding a defined benefit (DB) pension plan, said the government. The solvency relief option is applicable to all DB pension plans other then specified multi-employer pension plans.
The amendment to the regulation permits a plan administrator, on written application to the Superintendent of Pensions, to consolidate all existing pension plan solvency deficiencies into one new solvency deficiency. The regulation amendment then further allows for that solvency deficiency to be amortized over a period not exceeding a maximum of 10 years (rather than the usual five year requirement).
The amendment requirement has not changed the period required by the regulation in which to amortize unfunded liabilities, said the government.
Plan administrators are permitted to make only one application for the consolidation of solvency deficiencies and extension of the amortization period. The application may be made in respect of any actuarial valuation report that has a review date between Dec. 31, 2011 and Dec. 31, 2012.
For more information, view the provisions here.
