Proposed amendment to Ontario Regulation 178/11 under the Pension Benefits Act - Solvency Funding Relief for Certain Public Sector Pension Plans
Bill or Act:
Pension Benefits Act
Summary of Proposal:
Changes made to the regulation under the Pension Benefits Act (PBA) in May 2011 provide certain pension plans in the public sector and broader public sector with the opportunity to take advantage of temporary solvency funding relief (Ontario Regulation 178/11).
In exchange for the relief, plan sponsors are expected to adopt plan changes that would make their plans more sustainable in the long term. This process may involve negotiations with collective bargaining agents. There will be no additional funding from the province to finance pension deficits.
The first window for applications closed in March 2011 and the second window closed in December 2011. The third and final window for applications is now open, and closes on December 31, 2012.
For the first and second windows, one of the eligibility requirements was to base the Stage 1 relief on the first valuation dated on or after December 31, 2009 and filed after the regulation came into effect (May 2011). Due to the continued low interest rate environment, this eligibility requirement is being revised.
For the purpose of this 3rd and final window, Stage 1 relief will be based on the first valuation report filed with the Financial Services Commission of Ontario (FSCO) after December 31, 2012, regardless of the valuation date.
This means that all single employer pension plans that meet the public sector pension plan definition specified in subsection 47.7(1) of Regulation 909 under the Pension Benefits Act that are interested in seeking solvency funding relief and did not apply during the first two windows may apply during this final window. To apply, completed applications must be submitted to the Ministry of Finance at the address noted below no later than December 31, 2012. The Ministry will advise applicants about the decision before the filing deadline with FSCO.
The filing deadline with FSCO for a pension plan with a valuation date on or after June 1, 2011 and before May 30, 2012 has been extended by regulation to February 28, 2013, to allow these plans to apply during the third and final window.
Plan sponsors will be notified whether or not they have been accepted into Stage 1 of the solvency relief regime by mid-February, 2013. Those pension plans that meet the criteria for temporary solvency funding relief will be named in Schedule 1 of Ontario Regulation 178/11.
Details of the relief measures are outlined in Ontario Regulation 178/11.
Eligibility criteria and additional conditions as well as examples of steps that eligible pension plans could take and the measurement of financial impacts are not part of the regulation, but are outlined in a technical paper. A link to the technical paper is provided below.
Please note that this technical paper was originally posted during the first two windows. Given the change in the above-noted eligibility requirements, the second bullet on page 4 (read as "eligibility for Stage 1 relief would be based on the first valuation report (Stage 1 valuation report) dated on or after December 31, 2009 and filed after the regulation is made [expected by mid-May, 2011])" is no longer applicable. The eligibility for Stage 1 relief will be based on the first valuation report filed after December 31, 2012, as noted above.
December 5, 2012
Comments Due Date:
January 20, 2013
Public Sector Pension Plan Solvency Relief
Pension Policy Branch
Ministry of Finance
5th Floor, Frost Building South
7 Queen's Park Crescent
Toronto ON M7A 1Y7