Solvency Funding Relief Regulations (SOR/2006-275)

Information To Be Provided to Beneficiaries

• 8 (1) Subject to subsection (2), the administrator shall provide the following information to the beneficiaries:

  • (a) the solvency ratio of the plan as of the day on which the initial solvency deficiency emerged;

  • (b) the amount of the initial solvency deficiency;

  • (c) a description of the extent to which the beneficiaries' benefits would be reduced if the plan were fully terminated and wound up with the solvency ratio referred to in paragraph (a);

  • (d) a statement indicating that extending the period for funding the initial solvency deficiency as permitted by this Part may result in a lower value of the plan assets during the funding period than would be the case if the deficiency were funded over a period not exceeding five years and that the longer funding period may also extend the period during which the plan assets are less than the plan liabilities;

  • (e) the special payments that would have been made during the first plan year covered by the actuarial report referred to in paragraph 10(b) if the initial solvency deficiency were to be funded in accordance with Part 1;

  • (f) the special payments that are to be made during the first plan year covered by the actuarial report referred to in paragraph 10(b) if the initial solvency deficiency is funded in accordance with this Part;

  • (g) [Repealed, SOR/2015-60, s. 34]

  • (h) a statement indicating that the plan may be funded in accordance with this Part only if less than one third of the members object and less than one third of the beneficiaries excluding members object;

  • (i) a statement indicating that the Superintendent's approval is not required to fund the initial solvency deficiency in accordance with this Part;

  • (j) a statement indicating that the beneficiaries may object to the proposal to fund the plan in accordance with this Part by sending an objection to the administrator at the address and by the date indicated in the statement, and that date shall not be less than 30 days after the day on which the other information required to be provided under this section is provided by the administrator;

  • (k) a statement indicating that if the plan is funded in accordance with this Part, amendments to the plan that increase the pension benefits will be restricted for the first five plan years of funding in accordance with this Part; and

  • (l) a statement setting out the right of access to the documents described in paragraph 28(1)(c) of the Act.

• (2) If a beneficiary is represented by a beneficiary representative, the administrator shall provide the information set out in subsection (1) to the beneficiary representative.

9 If a beneficiary representative has the authority to act on behalf of a beneficiary with respect to any matter under this Part, the administrator shall deal with the beneficiary representative.

Documents and Information To Be Filed with Superintendent

10 The administrator shall file the following documents and information with the Superintendent:

• (a) written notification that the initial solvency deficiency is to be funded in accordance with this Part;

• (b) the actuarial report valuing the plan as of the day on which the initial solvency deficiency emerged;

• (c) other than in the case of a multi-employer pension plan, a written statement confirming that a resolution of the board of directors of the employer has been passed, if the employer is a corporation, or, if the employer is not a corporation, an approval of the persons who have the authority to direct or authorize the actions of that body, has been given, authorizing the special payment schedule calculated in accordance with this Part; and

• (d) a written statement confirming that the information set out in section 8 has been provided to the beneficiaries or to the beneficiary representatives and that less than one third of the members have objected and less than one third of the beneficiaries excluding members have objected.

Prescribed Solvency Ratio

11 For the purposes of paragraph 10.1(2)(b) of the Act, the prescribed solvency ratio level for the first five plan years of funding in accordance with this Part is the solvency ratio calculated on the basis of the most recent actuarial report.

New Solvency Deficiency

• 12 (1) Despite section 9 of the Pension Benefits Standards Regulations, 1985, a solvency deficiency that emerges after the day on which the initial solvency deficiency emerged shall be calculated as the amount by which the solvency liabilities exceed the sum of the following amounts:

  • (a) the adjusted solvency asset amount,

  • (b) the present value of special payments made under section 6 or 7 if at least one of those payments is due more than five years after the valuation date, and

  • (c) the present value of the going concern special payments that were used to fund the initial solvency deficiency that are due during the period beginning on the valuation date and ending on the 10th anniversary of the date of emergence of the initial solvency deficiency if at least one of those payments is due more than five years after the valuation date.

• (2) The interest rate used to determine the present value of the special payments referred to in subsection (1) is the same as the interest rate used to determine the solvency liabilities.

Termination of Plan

13 If a plan is fully terminated and on the day on which it terminates the liabilities of the plan exceed its assets, the lesser of the amount determined in subsection 6(4) and the amount by which the liabilities of the plan exceed its assets shall immediately be remitted to the pension fund.

Ceasing 10-year Funding

• 14 (1) A plan may cease to be funded under this Part, beginning on the first day of a plan year, by giving written notice to the Superintendent not later than six months after the beginning of that plan year.

• (2) The notice shall indicate whether the plan has a surplus as of the first day of the plan year.

• (3) If funding ceases, section 9 of the Pension Benefits Standards Regulations, 1985 applies in respect of the plan except as otherwise provided under this Part.

Calculating Surplus

15 A surplus in respect of a plan shall be determined in the manner prescribed by subsection 16(1) of the Pension Benefits Standards Regulations, 1985 as if the plan had been fully terminated.

Plan with Surplus

16 If a plan ceases to be funded in accordance with this Part and the plan has a surplus as of the first day of the plan year, this Part ceases to apply to the plan on the first day of that plan year.

Plan Without Surplus

• 17 (1) If a plan ceases to be funded in accordance with this Part and the plan does not have a surplus as of the first day of the plan year, section 9 of the Pension Benefits Standards Regulations, 1985 applies except as follows:

  • (a) when funding ceases before the sixth plan year,

    • (i) the administrator shall have an actuarial report prepared — in which the present value of the special payments referred to in section 6 or 7 shall be zero — valuing the plan as of the first day of the plan year in which funding ceases,

    • (ii) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with Part 1 from the day on which the initial solvency deficiency emerged to the day on which funding ceases, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund, and

    • (iii) and (iv) [Repealed, SOR/2010-149, s. 11]

    • (v) the special payments referred to in section 6 or 7 shall continue to be made until the first special payment required to fund the remaining initial solvency deficiency referred to in subparagraph (iii) is made to the pension fund; and

  • (b) when funding ceases after the fifth plan year,

    • (i) the administrator shall have an actuarial report prepared as of the first day of the plan year in which funding ceases, and

    • (ii) the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with Part 1 from the day on which the initial solvency deficiency emerged to the day on which funding ceases, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund.

• (2) [Repealed, SOR/2010-149, s. 11]

Crown Corporations

• 18 (1) The administrator of a plan of a Crown Corporation with an initial solvency deficiency that is funded in accordance with this Part shall not have to comply with subsection 6(2) and sections 8 and 10 if the administrator files the following documents and information with the Superintendent:

  • (a) the actuarial report valuing the plan as of the day on which the initial solvency deficiency emerged;

  • (b) a written statement confirming that a resolution of the board of directors of the Crown Corporation has been passed authorizing the special payment schedule calculated in accordance with this Part;

  • (c) a written statement confirming that the board of directors of the Crown Corporation has notified the Minister and the Minister responsible for the Crown Corporation of the decision that the initial solvency deficiency is to be funded in accordance with this Part; and

  • (d) a copy of letters from the Minister and the Minister responsible for the Crown Corporation acknowledging that they have been informed of the fact that the Crown Corporation intends to fund the initial solvency deficiency in accordance with this Part.

• (2) When the administrator provides the written statement under paragraph 28(1)(b) of the Act, the administrator shall also indicate the amount of the initial solvency deficiency and that the deficiency is to be funded in accordance with this Part by equal annual payments over a period not exceeding 10 years.

• (3) Section 11 shall not apply in respect of a plan if the documents and information set out in subsection (1) are filed with the Superintendent.

PART 310-year Funding with Letters of Credit

General Funding Rules

18.1 For the purposes of this Part,

• (a) despite paragraph 9(4)(c) of the Pension Benefits Standards Regulations, 1985, if there is a solvency deficiency, a plan shall be funded in each plan year by annual solvency special payments equal to the amount by which the solvency deficiency divided by 5 exceeds the amount of going concern special payments — other than those referred to in paragraph 27(1)(c) — that are payable during the plan year; and

• (b) unfunded liability means

  • (i) the going concern deficit of a plan as determined on the date that the plan was established;

  • (ii) the amount by which an increase in the going concern liabilities of a plan resulting from an amendment to the plan exceeds the going concern excess of the plan as determined on the day before the effective date of the amendment; or

  • (iii) the amount by which the going concern deficit of a plan determined at the valuation date exceeds the sum of

    • (A) the present value of going concern special payments established in respect of periods after the valuation date, and

    • (B) the present value of special payments referred to in paragraph 27(1)(b).

• 19 (1) Despite subsection 9(4) of the Pension Benefits Standards Regulations, 1985, an initial solvency deficiency of a plan may be funded by special payments sufficient to liquidate the initial solvency deficiency by equal annual payments over a period not exceeding 10 years from the day on which the initial solvency deficiency emerged.

• (2) The initial solvency deficiency may be funded in accordance with this Part if the employer

  • (a) obtains letters of credit for each of the first five plan years of funding under this Part, for the amount representing the difference between the present value, at the end of each plan year, of the remaining special payments under this Part and the present value of the remaining special payments that would have been required to be made to liquidate the initial solvency deficiency as if it had been funded under Part 1; and

  • (b) maintains letters of credit for the sixth plan year of funding and for each plan year after that year, representing the present value at the beginning of each plan year of the remaining special payments under this Part.

• (3) The present value of the remaining special payments shall be determined by using the interest rate that was assumed in valuing the liabilities of the plan for the purpose of calculating the initial solvency deficiency.