Regulation - LGIC
Proposed Amendment to Ontario Regulation 909 under the Pension Benefits Act - Making Permanent the Temporary Exemption of Certain JSPPs from the Requirement to File a Reference Valuation
Regulation Number(s):
Instrument Type:
Regulation - LGIC
Bill or Act:
Pension Benefits Act
Summary of Decision:
Approved
Further Information:
Proposal Number:
17-MOF015
Posting Date:
September 22, 2017
Summary of Proposal:
The government is seeking feedback on a proposal to make permanent the temporary exemption for certain plans from the requirement to file a reference valuation.
There are several actuarial methods that may be used to determine the funded status and contribution requirements of a pension plan. The Pension Benefits Act (PBA) stipulates the benefit allocation method as the standard method. Other methods, while acceptable to the actuarial profession, are considered alternative methods. Both the standard and alternative methods are a means to allocate the cost of providing a pension over the working life of a member.
While both standard and alternative methods are acceptable under the PBA, plans that choose to use an alternative method are required to prepare and file with the regulator a reference valuation using the standard method. The contribution rate determined under the alternative method must not be lower than that determined under the standard method. If the test is not met, contributions must be raised to at least the level determined under the standard method.
The choice of the actuarial method is the decision of the plan administrator, i.e., the pension plan boards in the case of JSPPs. This decision is usually made based a number of factors, including plan design, governance structure, plan demographics and structure of employee contributions.
The plans named in s.47.7.1 of regulation 909 are exempted from this provision until March 31, 2018.
Plan demographics have matured and benefit structures have changed considerably for some plans since the requirement was introduced over 10 years ago. Therefore, the government is proposing to exempt the named JSPPs from the requirement to file a reference valuation. These plans will, however, be required to continue preparing a reference valuation for disclosure purposes.
There are several actuarial methods that may be used to determine the funded status and contribution requirements of a pension plan. The Pension Benefits Act (PBA) stipulates the benefit allocation method as the standard method. Other methods, while acceptable to the actuarial profession, are considered alternative methods. Both the standard and alternative methods are a means to allocate the cost of providing a pension over the working life of a member.
While both standard and alternative methods are acceptable under the PBA, plans that choose to use an alternative method are required to prepare and file with the regulator a reference valuation using the standard method. The contribution rate determined under the alternative method must not be lower than that determined under the standard method. If the test is not met, contributions must be raised to at least the level determined under the standard method.
The choice of the actuarial method is the decision of the plan administrator, i.e., the pension plan boards in the case of JSPPs. This decision is usually made based a number of factors, including plan design, governance structure, plan demographics and structure of employee contributions.
The plans named in s.47.7.1 of regulation 909 are exempted from this provision until March 31, 2018.
Plan demographics have matured and benefit structures have changed considerably for some plans since the requirement was introduced over 10 years ago. Therefore, the government is proposing to exempt the named JSPPs from the requirement to file a reference valuation. These plans will, however, be required to continue preparing a reference valuation for disclosure purposes.
Contact Address:
Broader Public Sector Pensions Branch
Ministry of Finance
1st Floor, Frost Building South
7 Queen's Park Crescent
Toronto ON M7A 1Y7
Ministry of Finance
1st Floor, Frost Building South
7 Queen's Park Crescent
Toronto ON M7A 1Y7
Effective Date:
January 1, 2018
Decision:
Approved