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O. Reg. 484/18: ESSAR STEEL ALGOMA INC. PENSION PLANS FOR SALARIED EMPLOYEES AND HOURLY EMPLOYEES

under Pension Benefits Act, R.S.O. 1990, c. P.8

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Pension Benefits Act
Loi sur les régimes de retraite

ONTARIO REGULATION 484/18

ESSAR STEEL ALGOMA INC. PENSION PLANS FOR SALARIED EMPLOYEES AND HOURLY EMPLOYEES

Consolidation Period:  From June 8, 2019 to the e-Laws currency date.

Last amendment: 150/19.

Legislative History: 150/19.

This Regulation is made in English only.

CONTENTS

General

1.

Implementation of certain agreements

2.

Interpretation

3.

Solvency liabilities — exclusion of plant closure benefit

4.

Benefit allocation method

Application of General Regulation

5.

Application of General Regulation

6.

Same

7.

Election to fund in accordance with General Regulation

8.

Funding re new members

Funding Framework

9.

Rules re application of certain provisions in General Regulation

10.

Exemptions re trust property

11.

Letter of credit not permitted

12.

Required contributions — solvency ratio below 0.85

13.

Fixed contributions before filing of first valuation report

14.

Fixed contributions before solvency ratios reach 0.85

15.

Required contributions after solvency ratios first reach 0.85

16.

Excess contributions, year when solvency ratios first reach 0.85

Benefit Improvements

17.

Non-application of s. 14.0.1 of the Act, specified benefit improvements

18.

Other benefit improvements

Guarantee Fund

19.

Pension benefits not guaranteed by Guarantee Fund

20.

Benefits to be guaranteed by Guarantee Fund, solvency ratios of 0.85 or greater

Reports to the Chief Executive Officer

21.

Annual reports before solvency ratios reach 0.85

22.

Report re plan amendment

23.

Optional report

24.

Reports after solvency ratio reaches 0.85

25.

Final report

26.

Reports to the Chief Executive Officer — general

Information for Members, Former Members and Retired Members

27.

Statement for members, former members and retired members

Miscellaneous

28.

Documents to be filed

Transition

29.

Transition

 

General

Implementation of certain agreements

1. This Regulation implements, in part, the following agreements:

1. The Pension Matters Agreement effective November 16, 2018 between the Consenting Creditors, Algoma Steel Inc. and United Steelworkers on behalf of itself and its Local 2251.

2. The Pension Matters Agreement effective November 16, 2018 between Algoma Steel Inc. and The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers) on behalf itself and its Local 2724.

3. The agreement, effective November 30, 2018, in respect of the Salaried Employees Plan between Essar Steel Algoma Inc. and Algoma Steel Inc. and The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers) on behalf of itself and its Local Union 2724 members of The Essar Steel Algoma Inc. Pension Plan for Salaried Employees, registered under the Act as number 1079896 and the former members and retired members (or the surviving spouses of such members) of The Essar Steel Algoma Inc. Pension Plan for Salaried Employees, registered under the Act as number 1079896, whether or not such members were represented by a union when they were employed with Essar Steel Algoma Inc., Essar Tech Algoma Inc., Algoma Holdings B.V., Essar Steel Algoma (Alberta) ULC, Cannelton Iron Ore Company or Essar Steel Algoma Inc. USA, but with the exception of Opt-Out Individuals within the meaning of the Amended and Restated Representative Counsel Order.

4. The agreement, effective November 30, 2018, in respect of the Hourly Employees Plan between Essar Steel Algoma Inc. and Algoma Steel Inc. and The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers) on behalf of itself and its Local Union 2251 members of The Essar Steel Algoma Inc. Pension Plan for Hourly Employees, registered under the Act as number 1079904, and The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local Union 2251, on behalf of former members and retired members (or the surviving spouses of such members) of The Essar Steel Algoma Inc. Pension Plan for Hourly Employees, registered under the Act as number 1079904 who were represented by Local 2251 immediately prior to the date on which they retired or their employment was otherwise terminated, but with the exception of 2251 Hourly Plan Opt-Out Individuals within the meaning of the Local 2251 Representation Order and the former members and retired members (or the surviving spouses of such members) of The Essar Steel Algoma Inc. Pension Plan for Hourly Employees, registered under the Act as number 1079904 that opted out of representation by Local 2251 within the meaning of the Local 2251 Representation Order, whether or not such members were represented by a union when they were employed with Essar Steel Algoma Inc., Essar Tech Algoma Inc., Algoma Holdings B.V., Essar Steel Algoma (Alberta) ULC, Cannelton Iron Ore Company or Essar Steel Algoma Inc. USA, but with the exception of Opt-Out Individuals within the meaning of the Amended and Restated Representative Counsel Order.

Interpretation

2. (1) In this Regulation,

“adjusted solvency deficiency” has the meaning set out in subsection (3);

“Amended and Restated Representative Counsel Order” means the order of the Ontario Superior Court of Justice (Commercial List) in court file number CV-15-000011169-00CL dated November 9, 2015, entitled “Amended and Restated Representative Counsel Order”, as amended by the Local 2251 Representation Order;

“annual report” means, in relation to the Hourly Employees Plan or the Salaried Employees Plan, the valuation report required under section 21 or 24, as the case may be;

“Consenting Creditors” means those Essar Steel Algoma Inc., pre-petition term lenders and holders of its 9.5 per cent pre-petition senior secured notes due 2019 that are parties to a Restructuring Support Agreement dated September 15, 2016 (as amended and restated as of August 15, 2017 and as further amended from time to time);

“General Regulation” means Regulation 909 of the Revised Regulations of Ontario, 1990 (General) made under the Act;

“going concern funded ratio” means, in relation to the Hourly Employees Plan or the Salaried Employees Plan, the ratio of “Y” to “Z”, where,

  “Y” is the value of the assets of the pension plan determined on the basis of a going concern valuation, including accrued and receivable income, and

“Z”   is the total amount of the going concern liabilities of the pension plan;

“Hourly Employees Plan” means The Essar Steel Algoma Inc. Pension Plan for Hourly Employees, registered under the Act as number 1079904;

“Local 2251 Representation Order” means the order of the Ontario Superior Court of Justice (Commercial List) in court file number CV-15-000011169-00CL dated December 5, 2017, entitled “Local 2251 Representation Order”;

“Salaried Employees Plan” means The Essar Steel Algoma Inc. Pension Plan for Salaried Employees, registered under the Act as number 1079896;

“solvency ratio” means, in relation to the Hourly Employees Plan or the Salaried Employees Plan, the ratio of “Y” to “Z”, where,

  “Y” is the total amount of the solvency assets of the pension plan related to defined benefits and ancillary benefits, and

“Z”   is the total amount of the solvency liabilities related to defined benefits and ancillary benefits of the pension plan.

(2) Expressions in this Regulation have the same meaning as in the General Regulation, except where otherwise indicated.

(3) The adjusted solvency deficiency of a pension plan as of a particular valuation date is the amount, if any, by which 85 per cent of the solvency liabilities of the pension plan exceeds the solvency assets of the pension plan.

(4) For the purposes of this Regulation, benefit improvements are made under a pension plan if an amendment to the plan affects the pensions, pension benefits or ancillary benefits provided by the plan and increases the amount of the normal cost, the going concern liabilities or the solvency liabilities of the plan.

Solvency liabilities — exclusion of plant closure benefit

3. For the purposes of the definition of “solvency liabilities” in subsection 1 (2) of the General Regulation, the solvency liabilities of the Hourly Employees Plan and the Salaried Employees Plan also exclude liabilities for the plant closure benefit to which individuals who were members on December 31, 2001 are entitled under the relevant plan.

Benefit allocation method

4. For the purposes of this Regulation, a benefit allocation method shall be used to determine the normal cost and going concern liabilities of a pension plan.

Application of General Regulation

Application of General Regulation

5. The General Regulation applies to the Hourly Employees Plan and the Salaried Employees Plan except as provided in this Regulation.

Same

6. (1) For greater certainty, the General Regulation applies with respect to the Hourly Employees Plan and the Salaried Employees Plan on and after the earlier of,

(a) 20 years after the day this Regulation comes into force; or

(b) the date on which the employer is required to commence funding the pension plans in accordance with the General Regulation, if the employer makes the elections described in section 7.

(2) The only provisions of this Regulation that continue to apply after the General Regulation begins to apply are,

(a) this section and sections 1 to 3 and 10;

(b) section 19 if, before the General Regulation begins to apply, the administrators of the Hourly Employees Plan and of the Salaried Employees Plan have not filed reports showing that both pension plans have a solvency ratio of equal to or greater than 0.85; and

(c) subsection 20 (2) if, before the General Regulation begins to apply, the administrators of the Hourly Employees Plan and of the Salaried Employees Plan have filed reports showing that both pension plans have a solvency ratio of equal to or greater than 0.85.

Election to fund in accordance with General Regulation

7. (1) The employer may file elections with the Chief Executive Officer to commence funding both the Hourly Employees Plan and the Salaried Employees Plan in accordance with the General Regulation instead of in accordance with this Regulation if both pension plans have an available actuarial surplus determined in accordance with section 7.0.2 of the General Regulation. O. Reg. 484/18, s. 7 (1); O. Reg. 150/19, s. 1.

(2) Both elections must be filed at the same time and they cannot be withdrawn. O. Reg. 484/18, s. 7 (2).

(3) The final report for each pension plan required under section 25 must be filed with the elections. O. Reg. 484/18, s. 7 (3).

(4) The effective date on which the employer shall commence funding the pension plans in accordance with the General Regulation is the valuation date of the final reports. O. Reg. 484/18, s. 7 (4).

Funding re new members

8. If the Hourly Employees Plan or the Salaried Employees Plan is amended to permit new members to join the pension plan,

(a) any going concern unfunded liability in respect of the new members, any reduced solvency deficiency in respect of the new members and any increase in the going concern liabilities of the pension plan as a result of the amendment permitting new members to join the pension plan and any subsequent amendments in respect of the new members shall be funded in accordance with the General Regulation as if none of the exceptions or modifications to the General Regulation set out in this Regulation applied; and

(b) any lump sum contributions shall be made if they are required to ensure that the solvency ratio and the going concern funded ratio of the pension plan are above the levels prescribed in section 3.0.1 of the General Regulation as a result of any amendment in respect of the new members.

Funding Framework

Rules re application of certain provisions in General Regulation

9. (1) Sections 3, 5, 7, 7.0.1, 7.0.2 and 7.0.3 of the General Regulation do not apply to the Hourly Employees Plan or the Salaried Employees Plan or to the employer with respect to those pension plans.

(2) Section 4 of the General Regulation does not apply to the Hourly Employees Plan or the Salaried Employees Plan or to the employer with respect to those pension plans, subject to the following:

1. Subsections 4 (5) to (11) of the General Regulation apply with respect to the pension plans.

2. Clauses 4 (2) (a.1), (b) and (b.1) and paragraphs 1 and 3.0.1 of subsection 4 (4) of the General Regulation apply with respect to the pension plans, but only to the extent that they require the making of contributions in respect of normal cost and contributions in respect of the provision for adverse deviations in respect of the normal cost.

(3) For greater certainty, unless the employer has filed elections under section 7 to commence funding both the Hourly Employees Plan and the Salaried Employees Plan in accordance with the General Regulation, the employer shall not use available actuarial surplus determined in accordance with section 7.0.2 of the General Regulation to reduce or suspend contributions for the normal cost of either pension plan or contributions for the provision for adverse deviations in respect of the normal cost of either pension plan.

(4) Subsection (3) does not affect the use of excess contributions under section 16.

Exemptions re trust property

10. (1) Subsection 57 (3) of the Act does not apply to Essar Steel Algoma Inc. or to Algoma Steel Inc. in respect of contributions due and not paid into the pension fund of the Hourly Employees Plan or into the pension fund of the Salaried Employees Plan by Essar Steel Algoma Inc. before this Regulation came into force.

(2) Subsection 57 (4) of the Act does not apply to the Hourly Employees Plan or the Salaried Employees Plan or to Essar Steel Algoma Inc. or to Algoma Steel Inc. with respect to those pension plans.

Letter of credit not permitted

11. For greater certainty, section 55.2 of the Act does not apply to the employer in respect of the Hourly Employees Plan or the Salaried Employees Plan.

Required contributions — solvency ratio below 0.85

12. (1) This section applies with respect to the funding of the Hourly Employees Plan and the Salaried Employees Plan before the valuation date of a report filed under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85.

(2) The employer is required to make the following contributions to the Hourly Employees Plan and the Salaried Employees Plan:

1. Contributions for normal cost and for the provision for adverse deviations in respect of the normal cost in accordance with the General Regulation, subject to subsection 9 (3).

2. Fixed contributions, as described in sections 13 and 14.

3. Special payments, determined in accordance with subsection 18 (2), in connection with benefit improvements, if any, to which section 18 applies.

4. Lump sum contributions in connection with benefit improvements, if any, to which section 18 applies, to ensure that the solvency ratio and the going concern funded ratio of the pension plans are above the levels prescribed in section 3.0.1 of the General Regulation.

5. If the Hourly Employees Plan or the Salaried Employees Plan is amended to permit new members to join the pension plan, special payments relating to the following:

i. Any going concern unfunded liability in respect of the new members.

ii. Any reduced solvency deficiency in respect of the new members.

iii. Any increase in the going concern liabilities of the pension plan as a result of the amendment permitting new members to join the pension plan and any subsequent amendment in respect of the new members.

6. If the Hourly Employees Plan or the Salaried Employees Plan is amended to permit new members to join the pension plan, any lump sum contributions made to ensure that the solvency ratio and the going concern funded ratio of the pension plan are above the levels prescribed in section 3.0.1 of the General Regulation as a result of any amendment in respect of the new members.

Fixed contributions before filing of first valuation report

13. (1) After the day this Regulation comes into force, and until the day before the date on which a report is filed under this Regulation with a valuation date of April 1, 2018, the employer shall make the following monthly contributions:

1. $1,756,666.67 to the Hourly Employees Plan.

2. $826,666.67 to the Salaried Employees Plan.

(2) The payments shall be made on or before the last business day of the month in which the contributions are due.

Fixed contributions before solvency ratios reach 0.85

14. (1) The employer shall make annual fixed contributions to the Hourly Employees Plan and the Salaried Employees Plan in the amounts determined in accordance with this section during the period,

(a) beginning in the first month in which the reports with a valuation date of April 1, 2018 are filed under this Regulation; and

(b) ending on the valuation date of the first reports that are filed under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85.

(2) The annual fixed contributions shall be in the aggregate amount of $31 million to be paid in equal monthly instalments of $2,583,334 on or before the last business day of the month in which the contribution is due.

(3) The payments in respect of the fixed contributions shall be allocated between the Hourly Employees Plan and the Salaried Employees Plan and paid into the pension fund of the relevant pension plan using the formula,

$31 million × A/B

in which,

  “A” is the amount of the adjusted solvency deficiency of the pension plan as set out in the most recently filed report for that pension plan required under this Regulation, and

  “B” is the aggregate amount of the adjusted solvency deficiency of both pension plans as set out in the most recently filed reports for the pension plans required under this Regulation.

(4) In the formula set out in subsection (3), the amount represented by the expression “A/B” is to be calculated to four decimal places.

(5) If the amount represented by “A” in the formula set out in subsection (3) is zero for one of the pension plans, the entire fixed contribution of $31 million shall be paid into the pension fund of the other pension plan.

Required contributions after solvency ratios first reach 0.85

15. (1) This section applies with respect to the funding of the Hourly Employees Plan and the Salaried Employees Plan on and after the valuation dates of the first reports filed under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85.

(2) Despite section 9, for the purposes of this section, subsections 5 (16) and (16.1) of the General Regulation apply.

(3) On the valuation date of the reports described in subsection (1), the prior year credit balance of the pension plans is deemed to be zero.

(4) The employer is required to make the following contributions to the Hourly Employees Plan and the Salaried Employees Plan:

1. Contributions for normal cost and for the provision for adverse deviations in respect of the normal cost in accordance with the General Regulation, subject to subsection 9 (3).

2. Contributions, up to the contribution limit described in subsection (6), in respect of special payments related to a reduced solvency deficiency of either or both pension plans, a going concern unfunded liability of either or both pension plans or an increase in the going concern liabilities related to plan amendments made to either or both pension plans, all as determined in accordance with the General Regulation as if none of the exceptions or modifications to the General Regulation set out in this Regulation applied, excluding for all purposes the following:

i. Special payments with respect to benefit improvements described in subsection 18 (1).

ii. If the Hourly Employees Plan or the Salaried Employees Plan is amended to permit new members to join the pension plan, special payments relating to the following:

A. Any going concern unfunded liability in respect of the new members.

B. Any reduced solvency deficiency in respect of the new members.

C. Any increase in the going concern liabilities of the pension plan as a result of the amendment permitting new members to join the pension plan and any subsequent amendment in respect of the new members.

3. Special payments, determined in accordance with subsection 18 (2), in connection with benefit improvements, if any, to which section 18 applies.

4. Lump sum contributions in connection with benefit improvements, if any, to which section 18 applies, to ensure that the solvency ratio and the going concern funded ratio of the pension plans are above the levels prescribed in section 3.0.1 of the General Regulation.

5. If the Hourly Employees Plan or the Salaried Employees Plan is amended to permit new members to join the pension plan, special payments relating to the following:

i. Any going concern unfunded liability in respect of the new members.

ii. Any reduced solvency deficiency in respect of the new members.

iii. And any increase in the going concern liabilities of the pension plan as a result of the amendment permitting new members to join the pension plan and any subsequent amendment in respect of the new members.

6. If the Hourly Employees Plan or the Salaried Employees Plan is amended to permit new members to join the pension plan, any lump sum contributions made to ensure that the solvency ratio and the going concern funded ratio of the pension plan are above the levels prescribed in section 3.0.1 of the General Regulation as a result of any amendment in respect of the new members.

(5) For the purposes of paragraph 2 of subsection (4), on the valuation date of the reports described in subsection (1), the following rules apply:

1. The sum of the following amounts shall be liquidated, with interest at the rates described in subsection 5 (2) of the General Regulation, in equal monthly instalments over a period of five years that begins no later than 12 months after the valuation date of the report:

i. Any special early retirement window deficiencies described in sections 12 and 12.1 of Ontario Regulation 202/02 (Essar Steel Algoma Inc. Pension Plans) made under the Act immediately before those sections were revoked, determined prior to the valuation date of the report.

ii. Any solvency deficiency determined prior to the valuation date of the report.

iii. Any reduced solvency deficiency determined prior to the valuation date of the report.

2. The amounts in paragraph 1 shall not include any reduced solvency deficiency in respect of benefit improvements described in subsection 18 (1) or in respect of new members.

(6) The following rules apply with respect to the contribution limit referred to in paragraph 2 of subsection (4):

1. The aggregate contributions for both pension plans under that paragraph shall not exceed $31 million per year.

2. The annual contribution for each pension plan under that paragraph shall not exceed the contribution limit determined in respect of the pension plan in accordance with subsections (11) to (16), as applicable, and if this limit for one of the pension plans exceeds the annual contributions required under paragraph 2 of subsection (4) for that pension plan, the excess amount shall increase the contribution limit for that second pension plan.

(7) Contributions required under paragraph 2 of subsection (4), as limited under subsection (6), shall be paid into the pension fund of the relevant pension plan on a monthly basis and within the month in which they are due.

(8) The contributions described in paragraphs 1, 3 and 5 of subsection (4) and in subsection (7) are deemed, for the purposes of subsection 5 (16) of the General Regulation, to be required contributions under section 4 of the General Regulation.

(9) The employer may apply the prior year credit balance, if any, to reduce payments in respect of contributions required under paragraphs 3 and 5 of subsection (4) and under subsection (7).

(10) Subsections (11) to (16) apply if the contributions described in paragraph 2 of subsection (4) would be greater than $31 million but for the contribution limit described in paragraph 1 of subsection (6).

(11) If the amount of the adjusted solvency deficiency of the pension plans as set out in the most recently filed reports for the pension plans is not zero for both pension plans, the contribution limit described in paragraph 2 of subsection (6) for each pension plan shall be determined using the formula,

$31 million × C/D

in which,

  “C” is the amount of the adjusted solvency deficiency of the pension plan as set out in the most recently filed report for the pension plan, and

  “D” is the aggregate amount of the adjusted solvency deficiency of both pension plans as set out in the most recently filed reports for the pension plans.

(12) If the amount represented by “C” in the formula set out in subsection (11) is zero for one of the pension plans, for the purposes of paragraph 2 of subsection (6), $31 million shall be allocated to the contribution limit for the other pension plan.

(13) If the amount represented by “C” in the formula set out in subsection (11) is zero for both pension plans, the contribution limit described in paragraph 2 of subsection (6) shall be determined for each pension plan using the formula,

$31 million × E/F

in which,

“E” is the amount of the going concern unfunded liability of the pension plan as set out in the most recently filed report for the pension plan, and

“F” is the aggregate amount of the going concern unfunded liability of both pension plans as set out in the most recently filed reports for the pension plans.

(14) If the amount represented by “C” in the formula set out in subsection (11) is zero for both pension plans and the amount represented by “E” in the formula set out in subsection (13) is zero for one of the pension plans, for the purposes of paragraph 2 of subsection (6), $31 million shall be allocated to the contribution limit for the other pension plan.

(15) If the amount represented by “C” in the formula set out in subsection (11) is zero for both pension plans and the amount represented by “E” in the formula set out in subsection (13) is zero for both pension plans, the contribution limit described in paragraph 2 of subsection (6) shall be determined for each pension plan using the formula,

$31 million × G/H

in which,

  “G” is the amount of the solvency liability of the pension plan as set out in the most recently filed report for the pension plan, and

  “H” is the aggregate amount of the solvency liability of both pension plans as set out in the most recently filed reports for the pension plans.

(16) In the formulas set out in subsections (11), (13) and (15),

(a) the amounts represented by “E”, “F”, “G” and “H” shall be determined as if the General Regulation applied with none of the exceptions or modifications to the General Regulation set out in this Regulation; and

(b) the amounts represented by the expressions “C/D”, “E/F” and “G/H” are to be calculated to four decimal places.

(17) With respect to the payments to be made under paragraph 2 of subsection (4), if the aggregate contribution described in that paragraph for both pension plans is less than $31 million in a year, the employer shall make payments into the pension fund of each pension plan in the amounts determined in respect of each pension plan in accordance with the General Regulation as if none of the exceptions or modifications to the General Regulation set out in this Regulation applied.

Excess contributions, year when solvency ratios first reach 0.85

16. (1) In this section,

“specified period” means the period,

(a) beginning on the valuation date of the first reports prepared under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85, and

(b) ending on the day immediately before the day on which the reports described in clause (a) are filed.

(2) If the employer has made contributions to the Hourly Employees Plan which are in excess of the contributions the report requires in respect of the specified period, the employer may apply the amount of the excess contributions to offset any payment otherwise required in respect of the Hourly Employees Plan under the report for that pension plan as described in clause (a) of the definition of “specified period” in subsection (1).

(3) If the Hourly Employees Plan is amended before the full amount of any excess contributions has been applied under subsection (2), the administrator of the Hourly Employees Plan shall file a report under section 22 in respect of the amendment on the later of,

(a) the date the report is required to be filed under paragraph 3 of section 22; and

(b) the date on which the full amount of any excess contributions has been applied under subsection (2).

(4) If the employer has made contributions to the Salaried Employees Plan which are in excess of the contributions the report requires in respect of the specified period, the employer may apply the amount of the excess contributions to offset any payment otherwise required in respect of the Salaried Employees Plan under the report for that pension plan.

(5) If the Salaried Employees Plan is amended before the full amount of any excess contributions has been applied under subsection (4), the administrator of the Salaried Employees Plan shall file a report under section 22 in respect of the amendment on the later of,

(a) the date the report is required to be filed under paragraph 3 of section 22; and

(b) the date on which the full amount of any excess contributions has been applied under subsection (4).

(6) Subject to subsection (7), the valuation date of the next report to be filed under section 24 after the valuation date of the report prepared under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85 shall be the later of,

(a) the valuation date of the report that would otherwise be required under section 24; or

(b) the valuation date of the next annual report required to be filed under section 24 after the full amount of any excess contributions to each of the Hourly Employees Plan and the Salaried Employees Plan has been applied.

(7) The valuation date of the next report to be filed under section 24 shall not be more than three years after the valuation date of the report prepared under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85.

(8) If the valuation date of the next report is the date that is three years after the valuation date of the report prepared under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85, the employer is not entitled to use any outstanding amount of the excess contributions to offset any payments otherwise required in respect of the Hourly Employees Plan or the Salaried Employees Plan.

(9) Section 55.1 of the Act does not apply to the employer in respect of the excess contributions.

Benefit Improvements

Non-application of s. 14.0.1 of the Act, specified benefit improvements

17. (1) For the purposes of subsection 14.0.1 (2) of the Act, the following circumstances are prescribed:

1. A collective agreement governing the Hourly Employees Plan provides for benefit improvements to be made to the plan relating to the special early retirement window benefits described in subsection (2) and the post-retirement indexation described in subsection (3).

2. A collective agreement governing the Salaried Employees Plan provides for benefit improvements to be made to the plan relating to the special early retirement window benefits described in subsection (2) and the post-retirement indexation described in subsection (3).

(2) Amendments to the Hourly Employees Plan and the Salaried Employees Plan may provide for additional pension benefits and ancillary benefits to which members are entitled under the plan if they elected early retirement during the period that began on January 1, 2018 and ended on October 31, 2018 or if they elect early retirement during a period,

(a) that begins on January 1, 2019 and ends on October 31, 2019;

(b) that begins on January 1, 2020 and ends on October 31, 2020;

(c) that begins on January 1, 2021 and ends on October 31, 2021; or

(d) that begins on January 1, 2022 and ends on October 31, 2022.

(3) Amendments to the Hourly Employees Plan and the Salaried Employees Plan may provide for post-retirement indexation of pensions to take effect on the following dates:

1. July 1, 2018.

2. July 1, 2019.

3. July 1, 2020.

4. July 1, 2021.

5. July 1, 2022.

Other benefit improvements

18. (1) This section applies with respect to benefit improvements resulting from an amendment to the Hourly Employees Plan or the Salaried Employees Plan other than benefit improvements that are,

(a) described in subsections 17 (2) and (3); or

(b) required by law.

(2) The following rules apply with respect to the funding of the benefit improvements:

1. For greater certainty, section 3.0.1 of the General Regulation applies.

2. Any increase in the going concern liabilities of the pension plan as a result of the amendment that exceeds the value of any contributions in respect of the increase before the effective date of the amendment shall be liquidated, with interest at the going concern valuation interest rate, by equal monthly special payments over a period of eight years beginning on the effective date of the amendment.

3. 85 per cent of any increase in the solvency liabilities of the pension plan as a result of the amendment that exceeds the sum of the following amounts shall be liquidated by equal monthly special payments over a period of five years beginning on a date that is no later than 12 months after the effective date of the amendment:

i. the value of any contributions in respect of the increase before the effective date of the amendment, and

ii. the present value of special payments determined under paragraph 2 that are scheduled for payment in the period that begins on the effective date of the amendment and continues until the end of a five-year period that begins on a date no later than 12 months after the effective date of the amendment.

4. The rates of interest to be used in calculating special payments under paragraph 3 are the rates set out in subsection 5 (2) of the General Regulation.

5. The monthly special payments mentioned in paragraphs 2 and 3 shall be paid on or before the last business day of the month in which the special payment is due.

Guarantee Fund

Pension benefits not guaranteed by Guarantee Fund

19. The Hourly Employees Plan and the Salaried Employees Plan are prescribed pension plans for the purposes of paragraph 6 of section 85 of the Act, subject to section 20.

Benefits to be guaranteed by Guarantee Fund, solvency ratios of 0.85 or greater

20. (1) Section 19 ceases to apply as of the valuation date of reports filed for the Hourly Employees Plan and the Salaried Employees Plan under section 21, 22 or 23 showing that, as of the same valuation date, the Hourly Employees Plan and the Salaried Employees Plan each have a solvency ratio that is equal to or greater than 0.85.

(2) The amount of the assessment payable under section 37 of the General Regulation in respect of the fiscal year in which section 19 ceases to apply and in each subsequent year shall be determined in accordance with the following rule:

1. The formula in subsection 37 (4) of the General Regulation applies, except that the value of “B” in that formula shall be 3 per cent of the amount by which “E” exceeds “F” where,

“E” is the amount of the additional liability that would result if, on the valuation date of the last report filed for the pension plan under section 22, 23 or 24 on or before the assessment date, all plant closure benefits to which individuals who were members on December 31, 2001 are entitled under the plan were payable in respect of the members in Ontario who, on that valuation date, met the age and service requirements for those benefits, and

“F” is the amount, if any, by which the amount determined under clause (b) of the definition of “PBGF assessment base” in subsection 1 (2) of the General Regulation exceeds the PBGF liabilities, both determined as of the valuation date referred to in the definition of “E”.

(3) For the assessment payable in respect of the fiscal year in which section 19 ceases to apply, the amount determined in accordance with the formula in subsection 37 (4) of the General Regulation, as modified by paragraph 1 of subsection (2), shall be prorated for the period beginning on the date as of which section 19 ceases to apply and ending on the last day of that fiscal year.

Reports to the Chief Executive Officer

Annual reports before solvency ratios reach 0.85

21. Subject to section 24, the administrator of the Hourly Employees Plan and the administrator of the Salaried Employees Plan shall cause their respective pension plan to be reviewed annually and shall each prepare a report in accordance with the following rules:

1. The first report must be prepared with a valuation date of April 1, 2018 and must be filed within 60 days after the day this Regulation comes into force.

2. Every subsequent report must be prepared with a valuation date of April 1.  However, the valuation date of a report, other than the first report, may be a date other than April 1 if that other date is determined in accordance with the terms of the agreements set out in section 1.

3. Every report, other than the first report, must be filed within six months after the valuation date of the report.

4. The report must set out the following information with respect to the pension plan to which the report relates:

i. The pension plan’s adjusted solvency deficiency at the valuation date.

ii. Contributions to the pension plan that are required to be made, other than contributions that are required to be made in respect of new members as described in section 8,

A. for normal cost,

B. for the provision for adverse deviations in respect of the normal cost, and

C. for the purposes of section 14 and paragraph 1, 2 or 3 of subsection 18 (2).

iii. If the plan is amended to permit new members to join the pension plan and one or more new members has joined the pension plan, contributions to the pension plan that are required to be made in respect of those members,

A. for normal cost,

B. for the provision for adverse deviations in respect of the normal cost,

C. for special payments relating to any going concern unfunded liability in respect of the new members,

D. for special payments relating to any reduced solvency deficiency in respect of the new members,

E. for special payments relating to any increase in the going concern liabilities of the pension plan as a result of the amendment permitting new members to join the pension plan and any subsequent amendment in respect of the new members, and

F. any lump sum contributions made to ensure that the solvency ratio and the going concern funded ratio of the pension plan are above the levels prescribed in section 3.0.1 of the General Regulation as a result of any amendment in respect of the new members.

iv. The amount of contributions made to the pension plan during the period from the valuation date of the most recent prior report to the valuation date of the report under this section.

v. The contributions to the pension plan that, but for this Regulation, would have been required to be made during the period covered by the report.

vi. The allocation of the contributions to be made under this Regulation among the Hourly Employees Plan and the Salaried Employees Plan, as determined in accordance with section 14.

vii. The going concern funded ratio as of the valuation date.

5. The administrator shall give the employer a copy of the report immediately after filing it.

Report re plan amendment

22. If an amendment, other than an amendment described in subsection 17 (2) or (3), is made to the Hourly Employees Plan or the Salaried Employees Plan, or to both plans, that reduces or increases the plan’s normal cost, going concern liabilities or solvency liabilities, the administrators of the plans shall each file a report that satisfies the following:

1. The report must set out the information required under paragraph 4 of section 21 or under paragraph 3 of subsection 24 (2), whichever is applicable at the time.  However, the report must cover the period from the valuation date of the report to the valuation date of the next annual report.

2. If the plan to which the report relates was amended to provide for benefit improvements, the report must include a description of any lump sum contributions that were made to ensure that the solvency ratio and the going concern funded ratio of the pension plan are above the prescribed levels set out in section 3.0.1 of the General Regulation.

3. Subject to subsections 16 (3) and (5), the report must be filed within six months after the valuation date.

Optional report

23. (1) The administrators of the Hourly Employees Plan and the Salaried Employees Plan may elect to file a report under this section if all of the following conditions are satisfied:

1. The valuation date is on or after April 1, 2019 and is different from the valuation date of the most recent prior annual report.

2. A report is filed with respect to each pension plan.

3. The reports show that both pension plans had, on the valuation date, a solvency ratio of equal to or greater than 0.85.

(2) The reports must set out the information required under paragraph 4 of section 21, except that each report shall only cover the period from the valuation date of the report to the valuation date of the next annual report.

(3) The reports must be filed within six months after the valuation date.

(4) The administrators may elect to file a report under this section only once.

Reports after solvency ratio reaches 0.85

24. (1) If the administrators of the Hourly Employees Plan and the Salaried Employees Plan have filed reports showing that both pension plans have a solvency ratio of equal to or greater than 0.85 and the employer has begun to fund each pension plan in accordance with section 15, section 21 does not apply and instead subsection (2) of this section applies.

(2) The administrators of the pension plans shall cause their respective pension plan to be reviewed annually and shall each prepare a report in accordance with the following rules:

1. Every report must be prepared with a valuation date of April 1.  However, the valuation date of a report may be a date other than April 1 if that other date is determined in accordance with the terms of the agreements set out in section 1.

2. Every report must be filed within six months after the valuation date of the report.

3. The report must set out the following information with respect to the pension plan to which the report relates:

i. Contributions to the pension plan that are required to be made, other than contributions that are required to be made in respect of new members as described in section 8,

A. for normal cost,

B. for the provision for adverse deviations in respect of normal cost, and

C. for the purposes of paragraph 1, 2 or 3 of subsection 18 (2).

ii. If the plan is amended to permit new members to join the pension plan, contributions to the pension plan that are required to be made in respect of those members,

A. for normal cost,

B. for the provision for adverse deviations in respect of the normal cost,

C. for special payments relating to any going concern unfunded liability in respect of the new members,

D. for special payments relating to any reduced solvency deficiency in respect of the new members,

E. for special payments relating to any increase in the going concern liabilities of the pension plan as a result of the amendment permitting new members to join the pension plan and any subsequent amendment in respect of the new members, and

F. any lump sum contributions made to ensure that the solvency ratio and the going concern funded ratio of the pension plan are above the levels prescribed in section 3.0.1 of the General Regulation as a result of any amendment in respect of the new members.

iii. The amount of contributions made to the pension plan during the period from the valuation date of the most recent prior report to the valuation date of the report under this section.

iv. The contributions to the pension plan that, but for this Regulation, would have been required to be made during the period covered by the report.

v. The determination of the contribution limit under the applicable rules in section 15.

vi. The going concern funded ratio as of the valuation date.

4. The administrator shall give the employer a copy of the report immediately after filing it.

Final report

25. (1) Before the employer ceases to fund the Hourly Employees Plan or the Salaried Employees Plan in accordance with this Regulation and begins to fund the pension plan in accordance with the General Regulation, the administrator of the relevant pension plan shall submit to the Chief Executive Officer a final report with a valuation date that is on the day on which the plan ceases to be funded in accordance with this Regulation, and shall do so within 120 days after the valuation date. O. Reg. 484/18, s. 25 (1); O. Reg. 150/19, s. 1.

(2) The final report must set out the following information with respect to the pension plan to which the report relates:

1. The amount of contributions made to the pension plan during the period since the valuation date of the most recent prior report to the valuation date of the report under this section.

2. Any liability for benefit improvements described in sections 17 and 18 that remains to be funded as of the valuation date of the final report. O. Reg. 484/18, s. 25 (2).

Reports to the Chief Executive Officer — general

26. (1) The administrator of the Hourly Employees Plan and the administrator of the Salaried Employees Plan shall ensure that reports required to be filed under sections 21 to 25 in respect of both pension plans have the same valuation dates and are filed on the same day.

(2) The reports to be filed under sections 21 to 25 must satisfy the requirements set out in section 14 of the General Regulation, except as otherwise provided in this Regulation.

(3) A report filed under section 21, 22, 23, 24 or 25 is deemed to be a report filed under section 14 of the General Regulation.

Information for Members, Former Members and Retired Members

Statement for members, former members and retired members

27. (1) In the first annual statements to be given to the members of the Hourly Employees Plan and to the members of the Salaried Employees Plan under subsection 27 (1) of the Act after this section comes into force and in the first biennial statements to be given to the former members and retired members of each of those pension plans under subsection 27 (2) of the Act after this section comes into force, the administrator of the relevant pension plan shall include the following information, with respect to that pension plan, in addition to the information required by section 40, 40.1 or 40.2 of the General Regulation, as the case may be:

1. The amount of the adjusted solvency deficiency of the pension plan as of the valuation date of the most recent annual report.

2. The amounts of the contributions and payments required by this Regulation that the employer made to the pension plan during the period covered by the statement.

3. The amount of contributions that, but for this Regulation, would have been required under the General Regulation to be made to the pension plan during the period covered by the statement.

4. A statement that the pension benefits are not guaranteed by the Guarantee Fund unless valuation reports are filed for the Hourly Employees Plan and the Salaried Employees Plan showing that both plans have a solvency ratio that is equal to or greater than 0.85, in which case the pension benefits would be guaranteed by the Guarantee Fund as of the valuation date of those reports.

(2) In every subsequent annual statement to be given to the members of the Hourly Employees Plan and to the members of the Salaried Employees Plan under subsection 27 (1) of the Act after the first annual statement referred to in subsection (1) of this section is given and in every subsequent biennial statements to be given to the former members and retired members of each of those pension plans under subsection 27 (2) of the Act after the first biennial statement referred to in subsection (1) of this section is given, the administrator of the relevant pension plan shall include the information described in paragraphs 2, 3 and 4 of subsection (1) with respect to that pension plan, in addition to the information required by section 40, 40.1 or 40.2 of the General Regulation, as the case may be.

(3) The following rules apply if section 19 ceases to apply:

1. In the first annual statements to be given to the members of the Hourly Employees Plan and to the members of the Salaried Employees Plan under subsection 27 (1) of the Act after section 19 ceases to apply and in the first biennial statements to be given to the former members and retired members of each of those pension plans under subsection 27 (2) of the Act after section 19 ceases to apply, the administrator of the relevant pension plan shall include a statement that the pension benefits established under the pension plan are guaranteed by the Guarantee Fund.

2. The annual statements to be given to the members of the Hourly Employees Plan and to the members of the Salaried Employees Plan under subsection 27 (1) of the Act and the biennial statements to be given to the former members and retired members of each of those pension plans under subsection 27 (2) of the Act are not required to include the information described in paragraph 4 of subsection (1) of this section.

Miscellaneous

Documents to be filed

28. The agreements listed in paragraphs 1 to 4 of section 1 are prescribed for the purpose of clause 9 (2) (f) of the Act with respect to the pension plan to which the agreement relates.

Transition

Transition

29. Any election or report filed with or submitted to the Superintendent under this Regulation, as it read prior to the day section 1 of Schedule 23 to the Plan for Care and Opportunity Act (Budget Measures), 2018 came into force, is deemed to have been filed with or submitted to the Chief Executive Officer. O. Reg. 150/19, s. 1, 2.