Regulation - LGIC
Proposed Amendments to Ontario Regulation 909 under the Pension Benefits Act - Introduce a Permanent Funding Concerns Test and Remove the Transfer Ratio Disclosure Requirement for Listed Jointly Sponsored Pension Plans
Regulation Number(s):
Regulation 909
Instrument Type:
Regulation - LGIC
Bill or Act:
Pension Benefits Act
Summary of Decision:
Ontario Regulation 395/24 was filed on October 16, 2024.
Analysis of Regulatory Impact:
It is anticipated that there would be no new direct compliance costs or cost-savings associated with the proposed regulatory amendments.
Implementing a permanent funding concerns test for listed JSPPs would strengthen the pension regulatory framework in Ontario, supporting timely actions by plan boards in case of plan funding deficiencies. This would help support contribution stability, maintaining long-term plan stability and, in turn, providing plan members with better pension benefit security.
Removal of the transfer ratio disclosure requirement would simplify member disclosure requirements and ensure a more effective communication between plan administrators and plan members.
Implementing a permanent funding concerns test for listed JSPPs would strengthen the pension regulatory framework in Ontario, supporting timely actions by plan boards in case of plan funding deficiencies. This would help support contribution stability, maintaining long-term plan stability and, in turn, providing plan members with better pension benefit security.
Removal of the transfer ratio disclosure requirement would simplify member disclosure requirements and ensure a more effective communication between plan administrators and plan members.
Further Information:
PBA Regulation (General) - CONSULTATION DRAFT
Ontario Regulation 395/24
Proposal Number:
24-MOF013
Posting Date:
July 8, 2024
Summary of Proposal:
Certain jointly sponsored pension plans (JSPPs) listed in the General Regulation under the Pension Benefits Act have a temporary exemption from the solvency funding concerns test. This temporary exemption expires on January 1, 2025.
The Ministry of Finance is proposing regulatory amendments to introduce a permanent funding concerns test that would help to identify the risk of a plan developing a major funding issue and determine when the listed JSPPs would be required to file annual valuation reports.
The Ministry is also proposing regulatory amendments to remove the requirement for the listed JSPPs to disclose the plan's transfer ratio in periodic pension statements to address confusion and communications issues related to this disclosure.
The key design features of the proposed permanent funding concerns test include:
1. A 90% going concern funding threshold, determined as the ratio of the value of the plan's assets to the plan's liabilities, to trigger a requirement to file an annual valuation report;
2. The plan's liabilities are to be determined on a going concern basis using a benefit allocation method;
3. The value of the plan's assets is the market value of assets or actuarial value of assets, smoothed using an asset smoothing or averaging method that is consistent with the method used by the plan to determine the value of its going concern assets for the going concern funding valuation;
4. The value of the liabilities attributed to future escalated adjustments that would be provided in a discretionary or conditional manner as set out in the terms of the plan may be excluded from the plan's liabilities for the purposes of the test.
If approved, the proposed amendments establishing the permanent funding concerns test would be effective January 1, 2025, with a one-year transition period such that the listed JSPPs would be subject to the test with respect to reports with a valuation date on or after January 1, 2026.
If approved, the proposed removal of the transfer ratio disclosure requirement would be effective January 1, 2025.
At this time, the Ministry is requesting public and stakeholder input on the proposal. For more detail, please see the attached draft regulation.
The Ministry of Finance is proposing regulatory amendments to introduce a permanent funding concerns test that would help to identify the risk of a plan developing a major funding issue and determine when the listed JSPPs would be required to file annual valuation reports.
The Ministry is also proposing regulatory amendments to remove the requirement for the listed JSPPs to disclose the plan's transfer ratio in periodic pension statements to address confusion and communications issues related to this disclosure.
The key design features of the proposed permanent funding concerns test include:
1. A 90% going concern funding threshold, determined as the ratio of the value of the plan's assets to the plan's liabilities, to trigger a requirement to file an annual valuation report;
2. The plan's liabilities are to be determined on a going concern basis using a benefit allocation method;
3. The value of the plan's assets is the market value of assets or actuarial value of assets, smoothed using an asset smoothing or averaging method that is consistent with the method used by the plan to determine the value of its going concern assets for the going concern funding valuation;
4. The value of the liabilities attributed to future escalated adjustments that would be provided in a discretionary or conditional manner as set out in the terms of the plan may be excluded from the plan's liabilities for the purposes of the test.
If approved, the proposed amendments establishing the permanent funding concerns test would be effective January 1, 2025, with a one-year transition period such that the listed JSPPs would be subject to the test with respect to reports with a valuation date on or after January 1, 2026.
If approved, the proposed removal of the transfer ratio disclosure requirement would be effective January 1, 2025.
At this time, the Ministry is requesting public and stakeholder input on the proposal. For more detail, please see the attached draft regulation.
Contact Address:
Broader Public Sector Pensions Branch
Ministry of Finance
5th Floor, Frost Building South
7 Queen's Park Crescent East
Toronto, ON M7A 1Y7
or
Pension.Feedback@ontario.ca
Ministry of Finance
5th Floor, Frost Building South
7 Queen's Park Crescent East
Toronto, ON M7A 1Y7
or
Pension.Feedback@ontario.ca
Effective Date:
January 1, 2025
Decision:
Approved