Government announces relief for federally regulated pension plan sponsors
April 15, 2020 - Ottawa, Ontario - Department of Finance Canada
The Government of Canada is taking strong, immediate, and effective action to protect Canadians and businesses from the impacts of the COVID-19 pandemic.
Due to the pandemic’s effects on the economy, some federally regulated pension plan sponsors are facing significant financial constraints, which are creating short-term liquidity issues and, in some cases, threatening the long-term viability of their business.
To help address these issues, Finance Minister Bill Morneau today announced that the government will provide immediate, temporary relief to sponsors of federally regulated, defined benefit pension plans. This relief will be in the form of a moratorium, through the remainder of 2020, on solvency payment requirements for defined benefit plans.
This relief will help ensure that employers have the financial resources they need to maintain their operations and their pension plans, and to protect the retirement security of their workers and retirees.
The government also recognises that the impacts of the global pandemic on pension plan assets and liabilities could also significantly affect solvency funding obligations in 2021. The government will consult with stakeholders over the coming months on options to provide relief from 2021 funding obligations, as necessary.
Today’s announcement is part of the Government of Canada’s COVID-19 Economic Response Plan, which is addressing the challenges facing Canadians and their employers during this time of global uncertainty. The government continues to assess and respond to the impacts of COVID-19, and stands ready to take additional actions as needed to stabilize the economy and mitigate the impacts of the pandemic.
“A secure and dignified retirement for Canadians after a lifetime of hard work has always been a priority for the government, and even more so during this challenging period. By providing this temporary relief to federally regulated pension plan sponsors, we are helping to support plan sponsors so that they are able to continue to protect the retirement security of workers and retirees.’’
- Bill Morneau, Minister of Finance
The Pension Benefits Standards Regulations, 1985 require sponsors of federally regulated pension plans with funding deficiencies to make solvency special payments to eliminate these deficiencies over a period of five years.
The government has taken many actions to support Canadian businesses through the outbreak of COVID-19, with targeted new initiatives that:
- Propose to introduce the Canada Emergency Wage Subsidy of 75 per cent for qualifying businesses, for up to 12 weeks, retroactive to March 15, 2020. The Canada Emergency Wage Subsidy would apply at a rate of 75 per cent of the first $58,700 normally earned by employees – representing a benefit of up to $847 per week. The program would be in place for a 12-week period, from March 15 to June 6, 2020.
- Allow businesses, including self-employed individuals, to defer all Goods and Services Tax/Harmonized Sales Tax (GST/HST) payments until June, as well as customs duty payments owed for imports. This measure is the equivalent of providing up to $30 billion in interest-free loans to Canadian businesses. It will help businesses so they can continue to pay their employees and their bills, and help ease cash-flow challenges across the country.
- Launch the new Canada Emergency Business Account. This program will provide up to $25 billion to eligible financial institutions so they can provide interest-free, partially forgivable loans to small businesses, including not-for-profits. These loans – guaranteed and funded by the Government of Canada – will ensure that small businesses have access to the capital they need, at a zero-per-cent interest rate, so they can pay for rent and other important costs over the next number of months.
- Launch the new Small and Medium-sized Enterprise Loan and Guarantee program that will enable up to $40 billion in lending, supported through Export Development Canada and Business Development Bank, for guaranteed loans when businesses go to their financial institutions to help weather the impacts of COVID-19. This is intended for businesses that require greater help to meet their operational cash flow requirements.
- Extend the maximum duration of the Work-Sharing program, from 38 weeks to 76 weeks, for workers who agree to reduce their normal working hours because of developments beyond the control of their employers.
- Increase credit available for farmers and the agri-food sector through Farm Credit Canada.
- Defer the payment of income taxes. The government is allowing all taxpayers to defer, until August 31, 2020, the payment of income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to new balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
- Canada’s COVID-19 Economic Response Plan
- Launch of the Canada Emergency Business Account
- Government provides further flexibility for employers to access the Canada Emergency Wage Subsidy
- Additional Support for Canadian Businesses from the Economic Impacts of COVID-19
- Canada’s COVID-19 Economic Response Plan: Support for Canadians and businesses
- Prime Minister announces more support for workers and businesses through Canada’s COVID-19 Economic Response Plan
- Prime Minister outlines Canada’s COVID-19 response
- Government of Canada takes action on COVID-19
- Canada outlines measures to support the economy and the financial sector
Media may contact:
Office of the Minister of Finance
Department of Finance Canada
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