Skip to content

New Brunswick regulator seeks input on changes to defined benefit pension plan funding

Christopher Marr, TEP & Lauren Henderson

As defined benefit pension plans (“DB Plans”) throughout Canada continue to face funding challenges due to mounting solvency deficits, the New Brunswick Financial and Consumer Services Commission (“FCNB”) is proposing amendments to the General Regulation (the “Regulation”) under the Pension Benefits Act (“Act”), meant to reduce the volatility of funding requirements placed on plan sponsors and eliminate the need for funding relief measures. Many of the revisions reflect recent amendments in other provinces of Canada, though some differ.

FCNB is seeking public input on the proposed amendments, with a July 13, 2020 deadline for submissions.

Summary of proposed changes:

The following are highlights of the proposed amendments:

  • Enhanced going concern funding and introduction of PfAD – The period of time to fund going concern deficiencies has been reduced from fifteen years to ten years. As a new requirement, a provision for adverse deviation (“PfAD”) must be established (applied to liabilities, but not current service cost), and funded in the same manner as the other going concern obligations. The PfAD approach proposed is the same as that recently adopted in Nova Scotia.
  • Permanent solvency funding relief – DB plan sponsors will be permitted, on a go-forward basis, to elect to permanently fund their plans to an 85% solvency standard (rather than the current standard of 100%), still with a maximum five-year amortization period. Existing solvency funding exemptions will continue under the new regime.
  • Use of letters of credit – Instead of making payments into DB plans to fund solvency deficits, plan sponsors, for plans that are not multi-employer plans, will be permitted to use a letter(s) of credit, so long as it satisfies the requirements set out in the Regulation, including a cap on the total amount of all letters of credit of 15% of the solvency liabilities of the plan. This will provide more flexibility to plan sponsors and diminish the risk of trapped surpluses.
  • Governance policy – Plan administrators will now be required to adopt and follow a written governance policy that meets the specific criteria set out in the Regulations, and which generally sets out the structures and processes involved in overseeing, managing and administering the plan.
  • Individual Pension Plan (“IPP”) recognition and exemption – New in the Regulation is the recognition of IPPs. It is proposed that IPPs will be exempt from all requirements set out in the Act and Regulations.

The full text of the amendments is available here.


This article is provided for general information only. If you have any questions about the above, please contact a member of our Pensions and Benefits group.

Click here to subscribe to Stewart McKelvey Thought Leadership.

SHARE

Archive

Search Archive


Generic filters

 
 

New Brunswick’s new Enduring Powers of Attorney Act

August 10, 2020

Gerald McMackin, QC and Christopher Marr, TEP New Brunswick joined the rest of Canada in enacting legislation that deals solely with powers of attorney when the Enduring Powers of Attorney Act (“Act”) came into force…

Read More

COVID-19 immigration update

August 5, 2020

*Last updated: August 5, 2020 (Originally published April 1, 2020) Kathleen Leighton Due to the COVID-19 pandemic, there are various implications for the immigration world, including for those already in Canada, as well as those…

Read More

Prince Edward Island Labour and Employment legislative changes

July 31, 2020

Murray Murphy, QC, CPHR and Kate Jurgens Three new bills have been introduced in the most recent sitting of the Prince Edward Island legislature. In the employment setting Bill 38 aims to address the prevalence…

Read More

Game over for waiver of tort

July 27, 2020

Jennifer Taylor   The Supreme Court of Canada has finally put an end to the “waiver of tort” debate.   After years of uncertainty, a majority of the Court confirmed in Atlantic Lottery Corp Inc…

Read More

COVID-19 – potential liability for municipalities

July 21, 2020

Stephen Penney and Justin Hewitt As municipalities begin opening up recreational facilities in Alert Level 2 of the COVID-19 public health emergency implemented by the Provincial Government, Municipalities Newfoundland and Labrador has been receiving inquiries…

Read More

Applicability of business tax where operations limited

July 21, 2020

There is no obligation upon a municipality to reduce a business tax due to limited operations secondary to the COVID-19 pandemic. A municipality does, however, have the discretion to offer business tax relief. If a…

Read More

You’re more essential than you think: it is crunch time for Newfoundland and Labrador employers to avail of Essential Worker Support Program

July 9, 2020

Ruth Trask and John Samms Newfoundland and Labrador employers who continued operations this spring during Alert Levels 4 and 5 of the COVID-19 pandemic should take note of a new program offered by the provincial…

Read More

New Brunswick regulator seeks input on changes to defined benefit pension plan funding

July 8, 2020

Christopher Marr, TEP & Lauren Henderson As defined benefit pension plans (“DB Plans”) throughout Canada continue to face funding challenges due to mounting solvency deficits, the New Brunswick Financial and Consumer Services Commission (“FCNB”) is…

Read More

Downey v Nova Scotia: clarifying the process under the Land Titles Clarification Act

July 8, 2020

Jennifer Taylor   The Supreme Court of Nova Scotia has acknowledged the ongoing impact of systemic racism against African Nova Scotians in an important decision on the Land Titles Clarification Act (“LTCA”).   The case,…

Read More

Entry of business persons to Canada under CUSMA

July 3, 2020

Effective July 1, 2020, the North American Free Trade Agreement (“NAFTA”) was officially replaced by the Canada-United States-Mexico Agreement (“CUSMA”). Like NAFTA, CUSMA contains provisions for the temporary entry of foreign “business persons” to Canada…

Read More

Search Archive


Generic filters

Scroll To Top