The Alberta Superintendent of Pensions (Superintendent) recently announced long-anticipated measures providing potential funding relief to sponsors of Alberta-registered defined benefit plans.
In September 2017, the Superintendent granted sponsors of defined benefit pension plans a six-month filing extension for actuarial valuation reports required as of December 31, 2016, in order to further study whether circumstances warranted the provision of temporary funding relief to plan sponsors, or more substantial changes to the solvency funding regime, as have been introduced in other jurisdictions. In late March 2018, the Superintendent announced its intention to permit administrators to make application to consolidate existing pension plan solvency deficiencies into a single new deficiency to be amortized for a period of up to 10 years, and to exercise its discretion under the Employment Pension Plans Act to grant such variation from the funding rules. This announcement appears to be a substitute for a regulatory amendment providing temporary funding relief measures (as has previously been done in Alberta) as well as foreclose the possibility of any imminent legislative changes to the existing solvency funding regime, whether modelled on the changes introduced in Quebec and Ontario or otherwise.
The March 2018 announcement provides that in respect of any actuarial valuation report with a review date between December 31, 2016 and December 31, 2019 (inclusive), the administrator may apply for approval to consolidate existing solvency deficiencies and extend the amortization to up to 10 years. New solvency deficiencies identified in subsequent valuation reports may be amortized over the greater of five years or the remaining 10-year period. Notice must be provided to members that an extension of the amortization period has been granted by the Superintendent, and no benefit improvements that increase actuarial liabilities may be made without the prior consent of the Superintendent during the duration of the relief period.
Administrators of plans that have already filed the December 31, 2016 valuation may make an application for relief by filing a revised cost certificate and a letter detailing the change in solvency amortization payments. While administrators may not withdraw amounts contributed to the plan fund, the Superintendent will permit them to temporarily pause special payments until the excess of payments made following the filing of the December 31, 2016 valuation over the amounts that would have been required to be paid during the same period under the funding relief option, has been absorbed. All valuation reports with a December 31, 2016 review date are required to be filed by June 29, 2018.
For further information, please contact a member of our Pensions, Benefits & Executive Compensation group.
Blakes and Blakes Business Class communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.
For permission to republish this content, please contact the Blakes Client Relations & Marketing Department at [email protected].
© 2024 Blake, Cassels & Graydon LLP