Ottawa, March 25, 2011
2011-032
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The Honourable Jim Flaherty, Minister of Finance, today released final regulations that will strengthen Canada’s federally regulated private pension system.
“These changes will help pension plan sponsors to better manage their funding obligations while providing additional protection to plan members and retirees,”said Minister Flaherty.
Regulatory amendments to the Pension Benefits Standards Regulations, 1985 will come into force on April 1, 2011. These amendments will:
- permit plan sponsors to secure properly structured letters of credit in lieu of making solvency payments to the pension fund, up to a limit of 15 per cent of plan assets;
- require the plan sponsor to fully fund pension benefits on plan termination;
- void any amendments to a pension plan that would reduce the solvency ratio of the pension plan if the plan’s solvency ratio would be below a ratio of 0.85; and
- permit sponsors, plan members and retirees of a distressed pension plan to negotiate their own funding arrangements to facilitate a plan restructuring.
These improvements build on the Government’s comprehensive reform plan, announced in October 2009, which enhances protection for plan members, reduces funding volatility, makes it easier to negotiate changes to pension arrangements and modernizes the rules for investments made by pension funds.
“These changes are part of the Government of Canada’s overall commitment to strengthen the retirement income system, which includes working with the provincial and territorial governments to implement Pooled Registered Pension Plans,” said Minister Flaherty.
For further information, media may contact:
Annette Robertson
Press Secretary
Office of the Minister of Finance
613-996-7861
Jack Aubry
Media Relations
Department of Finance
613-996-8080
