Government Services April 24, 2008
Amendment to Pension Benefits Act,
1997
The House of Assembly will begin debate today on Bill
21, which will amend the Pension Benefit Act, 1997. This
amendment will provide greater protection for employees in the event
there is a deficit on the wind-up of a pension plan. 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. - 30 -
Media contact: 2008 04 24
3:50 p.m.
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