Measures will help employers with federally regulated pensions
New regulations that provide temporary solvency funding relief for federally regulated defined benefit (DB) pension plans came into force June 15.
Federally regulated DB plans represent seven per cent of all private pension plans in Canada and account for about 12 per cent of pension assets.
"These measures will help protect pension benefits while allowing companies more flexibility in meeting their pension obligations," said Minister of Finance Jim Flaherty.
The measures will:
• Extend the solvency funding payment period by one year for deficiencies reported as of year-end between November 1, 2008 and October 31, 2009.
• Extend the solvency funding payment period to 10 years from five years with the agreement of members and retirees.
• Extend the solvency funding payment period to 10 years from five years when the difference is secured with a letter of credit.
• Extend the solvency funding payment period to 10 years from five years for agent Crown corporations with terms and conditions to ensure a level playing field.
• Allow asset smoothing above 110 per cent with the difference in payments subject to a deemed trust.
