Upcoming Changes to Pension Plans

By Yosie Saint-Cyr, Editor at HRinfodesk---Canadian Payroll and Employment Law, May 2005

On May 5, 2005, the Minister of Employment and Social Solidarity for Quebec tabled proposed legislation, Bill 102, An Act Respecting the Funding of Certain Pension Plans, to temporarily relax certain rules relating to the funding of defined benefit pension plans and defined benefit contribution plans. This Act will apply to pension plans governed by the Supplemental Pension Plans Act.

As indicated, the Bill provides that an employer participating in such a pension plan may take advantage of the relaxation measures at the first actuarial valuation of the plan carried out after December 30, 2004. This means that under a first relaxation measure, an unfunded solvency liability noted at the time of that valuation may be combined with unfunded liabilities of the same nature determined in earlier valuations. In certain cases, the period normally prescribed to offset the unfunded solvency liability may be extended. Under Bill 102, eligible employers would qualify for an extension of the schedule for funding their pension deficits from the current five-year period to a 10-year period. Employers are automatically eligible for the extension if they are a municipality or a university-level educational institution. Active and retired members of a pension plan are deemed to have consented unless 30% of one of these groups objects to the change.

This measure allows employers to combine all the plan's deficits and start a new funding schedule as of the date of the new valuation.

An actuary must notify every employer participating in the plan, within 10 days that a pension committee has requested that an actuary carry out the first complete actuarial valuation of the pension plan. The employer or a multi-employer pension plan has 30 days to respond and provide written instructions to the actuary regarding what amounts must not be taken into account for determining a technical actuarial deficiency or any other amount prescribed in the Act at the time of the valuation.

The Bill also provides that the cost of an amendment to such a pension plan made during the period the bill specifies is to be evaluated on a funding basis and a solvency basis and funded using the method providing the greater value.

For additional information, read the full-text of An Act respecting the funding of certain pension plans./Bill 102.

By Yosie Saint-Cyr, Editor at HRinfodesk

Published on HRinfodesk---Canadian Payroll and Employment Law

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