Ontario government changing rules on defined benefit pensions, solvency requirements
TORONTO – Ontario is changing rules on workplace defined benefit pensions, including considering them to be solvent when they are 85 per cent funded.
The provincial Liberal government announced Friday that it would introduce legislation in the fall to make that change and others that it says will help keep defined benefit pension plans sustainable.
Single-employer defined benefit plans currently require funding on a solvency basis if they are anything less than 100 per cent funded, but the government is planning to lower that level to 85 per cent.
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That means if a pension plan is 85 per cent funded and is forced to wind up immediately, there would only be enough to pay 85 cents on the dollar to meet the plan’s obligations.
Employers would have five years to make special solvency payments to get back to 85 per cent if their plan falls below that threshold.
That move would give employers relief as defined benefit plans face challenges including historically low interest rates, but at the same time the government is also strengthening other employer pension obligations.
© 2017 The Canadian Press