Money Ontario changing pension solvency rules

04:10  20 may  2017
04:10  20 may  2017 Source:   MSN

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In 1988, regulations under the PBA were introduced to require pension plans to meet solvency funding requirements in addition to going concern funding requirements – a significant change to Ontario ’s pension funding rules .

ACPM Response to Ontario 's Solvency Funding Framework for Defined Benefit Pension Plans. We would strongly recommend against any changes that adds to existing going concern funding rules for such JSPPs.

TORONTO - Ontario is changing rules on workplace defined benefit pensions, including considering them to be solvent when they are 85 per cent funded.

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In 1988, regulations under the PBA were introduced to require pension plans to meet solvency funding requirements in addition to going concern funding requirements – a significant change to Ontario ’s pension funding rules .

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The provincial Liberal government announced today that it would introduce legislation in the fall to make that change and others that it says will help keep defined benefit pension plans sustainable.

Single-employer defined benefit plans currently require funding on a solvency basis if they are anything less than 100 per cent funded, but the government is planning to lower that level to 85 per cent.

That means if a pension plan is 85 per cent funded and is forced to wind up immediately, there would only be enough to pay 85 cents on the dollar to meet the plan's obligations.

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Proposed Amendment to Ontario Regulation 178/11 under the Pension Benefits Act (PBA) - Solvency Funding Relief for Certain Public Sector Pension Plans. Changes To The Rules For Ontario Locked-In Accounts - O. Reg. 239/09.

We are writing to you with respect to an issue of significant concern for many of ACPM’s members—the solvency funding rules for defined benefit (DB) pension plans. We are requesting that the Ontario Government enact further temporary solvency relief measures

Employers would have five years to make special solvency payments to get back to 85 per cent if their plan falls below that threshold.

That move would give employers relief as defined benefit plans face challenges including historically low interest rates, but at the same time the government is also strengthening other employer pension obligations.

If plans can't meet a going concern test of being able to fully fund their present obligations, they will have 10 years to make special payments to get to the appropriate funding, down from the current 15 years.

The government will also be requiring employers to fund a reserve within their plans in order to manage risk and keep benefits secure.

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Source: http://ca.pressfrom.com/news/money/-28557-ontario-changing-pension-solvency-rules/

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