Regulatory Initiative: Regulations Amending the Pension Benefits Standards Regulations, 1985 (Solvency Reserve Accounts and Multi-Employer Pension Plans) – Forward Regulatory Plan 2023-2025

Regulations Amending the Pension Benefits Standards Regulations, 1985 (Solvency Reserve Accounts and Multi-Employer Pension Plans)

Pension Benefits Standards Act, 1985

Budget Implementation Act, 2022, No. 1 amended the Pension Benefits Standards Act, 1985 (PBSA) to introduce a legislative framework for solvency reserve accounts (SRAs). The proposed regulatory amendments would establish the requirements and conditions related to the function of SRAs (e.g., requirements for their establishment, eligible contributions, conditions on withdrawals, etc.) that are necessary to operationalize the legislative framework.

Additionally, the Pension Benefits Standards Regulations, 1985 (PBSR) currently requires federally regulated multi-employer pension plans (MEPPs) that are not negotiated contribution plans to fully fund their plans on a solvency basis (i.e., maintain a 100 per cent solvency ratio). The proposed regulatory amendments would reduce the solvency funding standard for these types of plans from 100 per cent to 85 per cent.

The proposed amendments are not part of a formal regulatory cooperative initiative but would align with certain provincial regulatory frameworks that have implemented SRAs and reduced the solvency funding standard for multi-employer pension plans.

The proposed regulatory amendments for SRAs would not impose any significant costs on pension plan sponsors, administrators, members, or retirees. Additionally, the regulatory amendments lowering the solvency funding ratio for multi-employer pension plans that are not negotiated contribution plans would not impose any additional costs on Canadians or businesses.

The Department publicly consulted on an SRA framework in November 2020 and engaged with key stakeholders (e.g., plan sponsors, plan administrators, retiree groups, and actuarial professionals) on elements of the proposed the proposed framework, some of which will be enacted through the regulatory amendments.

The 30-day pre-publication comment period through the Canada Gazette, Part I will provide an opportunity for stakeholders to comments on the proposed amendments.

Kathleen Wrye
Director, Pensions Policy
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin St.
Ottawa, Ontario K1A 0G5
Email: Kathleen.Wrye@fin.gc.ca

November 2023