The Pension Benefits Act, 1997 requires pension plans to have an actuarial report completed at least every three years to assess the financial position of the plan, on the basis that it would wind-up on that date. If the actuarial report determined there would be a deficit on wind-up, the pension plan sponsor is required to inject sufficient funds over a five-year period to cover that deficit. However, under current legislation, if a plan winds up before the end of that five-year period, the employer is only required to fund the amount owing as of the wind-up date. In addition, any new deficits identified at the wind-up date are not required to be funded.

"Currently, plan members could have their pension benefits reduced if a plan winds up with a funding deficit," said the Honourable Kevin O�Brien, Minister of Government Services. "This could create financial difficulties for plan members in their retirement. The amendment being debated today will require pension plan sponsors to fully fund any deficits in pension plans should a plan wind up. This is positive news for pension plan members because it provides greater protection of their benefits."

This amendment will also ensure that the level of funding for pension benefits is consistent from province to province where a company operates in more than one province. Employees with a company in this province would receive the same level of funding when a plan winds up as employees of the same company in provinces that already have a similar requirement. In the past, it was possible to have employees in different provinces receiving varying levels of funding depending on how the pension plan is regulated by a province.

These changes will not apply to multi-employer pension plans which are different in that there is no single employer. These plans are usually negotiated by unions, for example in the skilled trades, on behalf of their members across a number of employers and/or jurisdictions. They are generally controlled and administered by a board of trustees comprised of union and employer representatives. Deficits in these plans are dealt with through a negotiated process.

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2008 04 24                                                  3:50 p.m.