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Pension Benefits Standards Regulations, 1985 (SOR/87-19)

Regulations are current to 2024-02-06 and last amended on 2017-06-23. Previous Versions

Distressed Pension Plan Workout Scheme (continued)

Information to be Provided to Members and Beneficiaries

 The employer shall provide the following information to the members and beneficiaries within 10 days after the beginning of the negotiation period:

  • (a) notice that the employer has entered into a distressed pension plan workout scheme;

  • (b) a statement indicating that a request for approval by the Minister of a funding schedule may only be made if less than one third of the members and less than one third of the beneficiaries object;

  • (c) a statement indicating that a collective bargaining agent may object or consent to a proposed workout agreement on behalf of the members that it represents;

  • (d) a statement indicating that a court-appointed representative may consent to a proposed workout agreement if less than one third of the members or one third of the beneficiaries that they represent object to the agreement;

  • (e) a statement indicating that the Minister’s approval is required to give effect to the funding schedule; and

  • (f) written notice of their right to examine the copies of the documents and information referred to in paragraph 28(1)(c) of the Act.

  • SOR/2011-85, s. 6

 The representative, or the employer if the representative consents, shall, in writing, inform the members or beneficiaries that they represent of their representation within 10 business days after their appointment by the Federal Court or the court referred to in section 10.8.

  • SOR/2011-85, s. 6

End of Negotiation Period

  •  (1) For the purposes of subsection 29.04(1) of the Act, the negotiation period ends on the earlier of

    • (a) the day on which the funding schedule is approved by the Minister, and

    • (b) the date determined under subsection (2).

  • (2) The negotiation period ends

    • (a) if the declaration referred to in subsection 29.03(4) of the Act is filed in the six month period following the end of the plan year, on the last day of the ninth month following the end of the plan year; and

    • (b) in any other case, on the last day of the ninth month following the date on which the declaration referred to in subsection 29.03(4) is filed.

  • SOR/2011-85, s. 6

Appointment of Representatives

 For the purposes of subsection 29.08(3) of the Act, the representatives shall

  • (a) be capable of fairly and adequately representing the interests of the persons that they represent; and

  • (b) not have an interest that is in conflict with the interests of the persons represented.

  • SOR/2011-85, s. 6

 For the purposes of subsection 29.08(2) of the Act, the appropriate court is the court in which a notice of intention or a proposal is filed under Part III of the Bankruptcy and Insolvency Act or the court that issued the initial order under the Companies’ Creditors Arrangement Act.

  • SOR/2011-85, s. 6

Information to be Provided to Representatives

  •  (1) The administrator, or the employer if the administrator is not the employer, shall provide to a representative

    • (a) within 10 days after the representative’s appointment under subsection 29.08(3) of the Act

      • (i) copies of the information return, the actuarial reports and the financial statements that have been filed with the Superintendent within the past three plan years under subsections 12(1) and (2) of the Act,

      • (ii) a copy of the plan,

      • (iii) a copy of the statement of investment policies and procedures of the plan established under section 7.1,

      • (iv) a list of the 10 largest asset holdings of the pension fund in descending order of asset value, along with the corresponding asset value, and

      • (v) the total face value of the letters of credit held in trust for the plan; and

    • (b) within 10 business days after a request of the representative, a copy of any document or information that members may examine under paragraph 28(1)(c) of the Act.

  • (2) If the representative is a bargaining agent, the administrator, or the employer if the administrator is not the employer, shall provide the documents and information required under paragraph (1)(a) to the representative within 30 days after the day on which the declaration is filed under subsection 29.03(4) of the Act.

  • SOR/2011-85, s. 6

Disclosure Requirements — Proposed Workout Agreement

  •  (1) For the purposes of subsection 29.2(1) of the Act, the members and beneficiaries shall be provided with the following information within 10 days after the day on which the employer and the representatives enter into the proposed workout agreement:

    • (a) written notice that the representatives and the employer have negotiated a proposed workout agreement respecting the funding schedule;

    • (b) the amount of the going concern deficit and of the solvency deficiency subject to the proposed workout agreement and the proposed funding schedule for those amounts;

    • (c) the special payments that would have been payable in the current plan year if the going concern deficit and the solvency deficiency had been funded in accordance with section 9;

    • (d) a written notice indicating that the funding schedule set out in the proposed workout agreement may only be submitted to the Minister for approval if less than one third of the members and less than one third of beneficiaries of the plan object; and

    • (e) if members and beneficiaries are represented by a representative that is not a bargaining agent, a description of how the members or beneficiaries may object to the proposed agreement and the period during which an objection may be made.

  • (2) For the purposes of subsection 29.09(1) of the Act, the employer and administrator shall provide the representatives with any information required to comply with subsection (1).

  • SOR/2011-85, s. 6

Consent of Members and Beneficiaries

 A period of 30 days beginning on the day on which the information is provided under section 10.91 is prescribed for the purposes of subsection 29.2(2) of the Act.

  • SOR/2011-85, s. 6

 A period of 40 days beginning on the day on which the information is provided under section 10.91 is prescribed for the purposes of subsection 29.3(2) of the Act.

  • SOR/2011-85, s. 6

Request for Approval

 For the purposes of subsection 29.3(3) of the Act, the request for approval of the funding schedule shall be submitted to the Minister within 15 days after the end of the period referred to in section 10.93 and shall be accompanied by a description of how the funding schedule addresses the criteria referred to in section 10.95.

  • SOR/2011-85, s. 6

Ministerial Considerations

 For the purposes of subsection 29.3(4) of the Act, the Minister shall consider

  • (a) the extent to which the defined benefit provisions of the plan have been amended and the extent to which those amendments have changed the cost structure of the plan; and

  • (b) the manner in which the proposed workout agreement addresses the sustainability of the plan with reference to such factors as the investment policies of the plan, the demographic profile of the plan’s membership and the nature of the plan’s benefits.

  • SOR/2011-85, s. 6

Notification of Minister’s Decision

 The administrator, or the representative if the representative consents, shall notify all members and beneficiaries of the Minister’s decision under subsection 29.3(4) of the Act within five business days after receiving notification from the Minister.

  • SOR/2011-85, s. 6

Minimum Requirements for Funding Schedule

 The funding schedule shall meet the following requirements:

  • (a) the funding schedule shall only address the funding and liquidation of a solvency deficiency and an unfunded liability as determined at the latest valuation date minus special payments and other payments due to the plan before the start of the negotiation period;

  • (b) the funding schedule shall specify the amounts of the going concern payments and solvency payments payable in each plan year that are used to fund the solvency deficiency and unfunded liability referred to in paragraph (a);

  • (c) the payments shall be made to the plan in equal monthly instalments;

  • (d) the aggregate present value, as at the end of the most recent plan year preceding the establishment of the funding schedule, of the going concern payments included in the funding schedule and the going concern special payments due to the plan before the start of the negotiation period shall be at least equal to the going concern deficit of the plan at the end of that year;

  • (e) the aggregate present value, as at the end of the most recent plan year preceding the establishment of the funding schedule, of the solvency payments and the going concern payments included in the funding schedule and the special payments due to the plan before the start of the negotiation period shall be at least equal to the solvency deficiency of the plan as at the end of the plan year preceding the plan year in which the payment is to be made;

  • (f) any annual going concern payment included in the funding schedule shall be no less than the annual amount of interest on the outstanding balance of the going concern deficit of the plan as at the end of the plan year preceding the plan year in which the payment is to be made;

  • (g) any annual solvency payment included in the funding schedule shall be no less than the annual amount of interest on the outstanding balance of the solvency deficiency as at the end of the plan year preceding the plan year in which the payment is to be made;

  • (h) the aggregate going concern payments to be made in the first half of the funding schedule shall be no less than 40% of the aggregate going concern payments for the entire duration of the funding schedule;

  • (i) the aggregate solvency payments to be made in the first five plan years of the funding schedule shall be no less than 40% of the aggregate solvency payments for the entire duration of the funding schedule;

  • (j) the interest rate used to determine the present value of going concern payments referred to in paragraph (d) and the interest rate used to calculate the amount of interest referred to in paragraph (f) is the same as the interest rate used to determine the going concern liabilities of the plan as at the valuation date; and

  • (k) the interest rate used to determine the present value of solvency payments referred to in paragraph (e) and the interest rate used to calculate the interest in accordance with paragraph (g) is the same as the interest rate used to determine the solvency liabilities of the plan as at the valuation date.

  • SOR/2011-85, s. 6

Optional Requirements for Funding Schedule

 A funding schedule may provide that if

  • (a) the funding schedule includes the funding of an unfunded liability or solvency deficiency and the unfunded liability or solvency deficiency is liquidated at a rate greater than the sum of payments set out in the funding schedule by the making of additional payments, the amount of a payment set out in a funding schedule for a subsequent year may be reduced if the outstanding balance of the unfunded liability that is being liquidated by the remaining payments set out in the funding schedule or the solvency deficiency that is being liquidated by those payments will at no time be greater than it would have been had the payments that were required to be made under the funding schedule in relation to the unfunded liability or solvency deficiency, whichever is applicable, been made;

  • (b) the funding schedule includes the funding of an unfunded liability and the aggregate of the present value of payments set out in the funding schedule and of going concern special payments, established in respect of a period after the valuation date, exceeds the going concern deficit, that excess may be applied to reduce the going concern payments that will become due at the latest dates in the approved funding schedule in such a way that the present value of those payments is reduced by the amount of reduction applied to the outstanding balance of the unfunded liability; and

  • (c) there is a solvency excess as described in subsection 10.991(2), the payments established to liquidate a solvency deficiency that will become due at the latest dates in the approved funding schedule may be eliminated or reduced in such a way that the present value of the remaining payments set out in the funding schedule to liquidate the solvency deficiency is reduced by the solvency excess.

  • SOR/2011-85, s. 6

Occurrence of Events After Approval of a Funding Schedule

 For the purposes of section 9, an unfunded liability that emerges after the day on which the funding schedule was approved by the Minister under section 29.3 of the Act shall be calculated as the amount by which the going concern deficit of a plan as determined at the valuation date exceeds the aggregate of

  • (a) the present value of going concern special payments established in respect of a period after the valuation date,

  • (b) the present value of the going concern payments set out in the funding schedule, established in respect of a period after the valuation date, and

  • (c) the present value of the solvency payments set out in the funding schedule, established in respect of a period after the valuation date.

  • SOR/2011-85, s. 6
  •  (1) For the purposes of section 9, a solvency deficiency that emerges after the day on which a funding schedule is approved by the Minister under section 29.3 of the Act shall be calculated as the amount by which the solvency liabilities exceed the aggregate of

    • (a) the adjusted solvency asset amount,

    • (b) the present value of the solvency payments set out in the funding schedule, established in respect of a period after the valuation date, and

    • (c) the present value of the going concern payments set out in the funding schedule, established in respect of a period beginning after the valuation date and ending on the date of the last solvency payment referred to in paragraph (b).

  • (2) For the purposes of section 9, a solvency excess that emerges after the day on which a funding schedule is approved by the Minister under section 29.3 of the Act shall be calculated as the amount by which the aggregate of the following amounts exceeds the solvency liabilities:

    • (a) the adjusted solvency asset amount,

    • (b) the present value of the solvency payments set out in the funding schedule, established in respect of a period after the valuation date, and

    • (c) the present value of the going concern payments set out in the funding schedule, established in respect of a period beginning after the valuation date and ending on the date of the last solvency payment referred to in paragraph (b).

  • SOR/2011-85, s. 6

Application for Registration

  •  (1) An application for the registration of a plan shall include

    • (a) a copy of the plan, insurance contract, trust agreement, resolution, collective agreement on pensions, by-law and any other document that creates or supports the plan, the pension fund and any amendments to them;

    • (b) a copy of a written explanation referred to in subparagraph 28(1)(a)(i) of the Act;

    • (c) a cost certificate, prepared as of the effective date of the plan or, if a cost certificate has been prepared as of a date more recent than the effective date of the plan, the most recent cost certificate, in the case of

      • (i) a defined contribution plan where the contributions under the plan are allocated to individual plan members, and

      • (ii) a defined benefit plan that is an insured plan;

    • (d) an actuarial report, in the case of a plan, other than a plan described in paragraph (c), prepared as of the effective date of the plan or, if an actuarial report has been prepared as of a date more recent than the effective date of the plan, the most recent actuarial report;

    • (e) a written statement, signed by the administrator, as to whether a statement of investment policies and procedures referred to in subsection 7.1(1) has been established.

    • (f) [Repealed, SOR/2011-196, s. 31]

    • (g) [Repealed, SOR/2015-60, s. 4]

  • (2) A cost certificate referred to in paragraph (1)(c) shall be prepared by an actuary, accountant or other professional adviser and shall include

    • (a) the estimated cost of benefits under the plan and the contributions to the plan, showing separately employer and plan member contributions during the plan year in respect of which the cost certificate is prepared; and

    • (b) the formula for computing the cost of benefits, showing the formula for allocating the cost between the employer and the plan members for subsequent plan years.

  • (3) An actuarial report referred to in paragraph (1)(d) shall be prepared by an actuary in accordance with the Standard of Practice for Valuation of Pension Plans published by the Canadian Institute of Actuaries in January 1994, as amended from time to time and shall include

    • (a) the estimated cost of benefits under the plan, showing separately employer and plan member contributions in respect of service

      • (i) for the plan year following the date as of which the report is prepared, where that date falls on the last day of a plan year, and

      • (ii) for the plan year in which the date as of which the report is prepared falls, where that date falls on any other day of a plan year;

    • (b) the formula for computing the cost of benefits, showing the formula for allocating the cost between the employer and the plan members in respect of service for that plan year and subsequent plan years;

    • (c) the outstanding amount of unfunded liabilities existing on the date as of which the report is prepared and the special payments to be made in accordance with paragraph 9(4)(b);

    • (d) a certification that the plan does not have a solvency deficiency or a determination of the solvency deficiency of the plan and the special payments to be made in accordance with paragraph 9(4)(c); and

    • (e) the solvency ratio of the plan and the method to be used to calculate the solvency ratio of the plan for the succeeding three plan years.

  • (4) Any actuarial report referred to in paragraph (1)(d) that is prepared in respect of a negotiated contribution plan shall, if the funding of the plan fails to meet the standards of solvency referred to in section 8, contain the options available in respect of such funding that would result in the funding of the plan meeting the standards for solvency.

  • (5) Where an actuarial report referred to in paragraph (1)(d) is prepared in respect of a plan that provides benefits based on a rate of remuneration at the date of commencement of the payment of the pension benefit or on an average of the rates of remuneration over a specified and limited period, the current remuneration of each plan member shall be projected to estimate the remuneration on which the pension benefits payable at retirement will be based.

  • (6) Where an actuarial report referred to in paragraph (1)(d) is prepared in respect of a plan that provides for an increase in pension benefits after cessation of membership or after retirement, the actuarial report shall take into account the value of the increase in determining the value of pension benefits under the plan.

  • SOR/90-363, s. 3
  • SOR/93-109, s. 4(E)
  • SOR/93-299, s. 3
  • SOR/2002-78, s. 9
  • SOR/2010-149, s. 4
  • SOR/2011-85, s. 7
  • SOR/2011-196, s. 31
  • SOR/2015-60, s. 4
 

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