Newfoundland and Labrador extends pension solvency relief
February 6, 2012
Amendments to the Solvency Funding Relief Regulations under the Newfoundland and Labrador Pension Benefits Act came into force in December 2011.
The Regulations had provided funding relief in 2008 to defined benefit pension plans, other than multi-employer plans, with respect to solvency deficiencies determined between January 1, 2007 and January 1, 2009. The amended Regulations extend this relief to solvency deficiencies determined between January 1, 2010 and January 1, 2013.
Under the Regulations, a solvency deficiency may be consolidated and amortized over five years, or amortized over 10 years provided that less than one-third of members and less than one-third of former members object. Alternatively, the solvency deficiency may be amortized over 10 years and the cost difference between the five year and 10 year levels of payment funded by means of a letter of credit. Where a letter of credit is used, the provisions relating to member objections do not apply.
Newfoundland joins New Brunswick, Quebec, Ontario, Manitoba and the federal pension regulator in enacting a further round of solvency relief. With solvency interest rates at an all time low, other jurisdictions will be considering similar measures.
The lawyers of McInnes Cooper are pleased to assist you with questions concerning pensions or employee benefits. Please contact any of our offices for further information.
McInnes Cooper’s newsletters are prepared for information only and are not intended to be either a complete description of any issue or the opinion of our firm. McInnes Cooper should be consulted regarding any situation to which any topic discussed herein might apply.
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