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O. Reg. 570/06: GENERAL
filed December 18, 2006 under Pension Benefits Act, R.S.O. 1990, c. P.8
Skip to contentontario regulation 570/06
made under the
pension benefits act
Made: December 13, 2006
Filed: December 18, 2006
Published on e-Laws: December 19, 2006
Printed in The Ontario Gazette: January 6, 2007
Amending Reg. 909 of R.R.O. 1990
(General)
1. (1) Clause (b) of the definition of “going concern assets” in subsection 1 (2) of Regulation 909 of the Revised Regulations of Ontario, 1990 is amended by striking out “the previously filed report” at the end and substituting “previously filed reports”.
(2) Clause (b) of the definition of “transfer ratio” in subsection 1 (2) of the Regulation is revoked and the following substituted:
(b) the sum of,
(i) the solvency liabilities, and
(ii) the liabilities for benefits, other than pension benefits and ancillary benefits payable under qualifying annuity contracts, that were excluded in calculating the solvency liabilities; (“ratio de transfert”)
2. (1) Paragraph 1 of subsection 4 (2.3) of the Regulation is revoked and the following substituted:
1. If the valuation date of a report filed under section 3, 13 or 14 is before December 31, 2006 and, at the valuation date, the amount determined under clause (a) of the definition of “going concern assets” in subsection 1 (2) is not less than the going concern liabilities determined using a benefit allocation method, the present value of the required contributions for the three-year period referred to in paragraph 1.1 must not be less than the present value of the contributions for that period that would be made in respect of the normal cost for the plan if the benefit allocation method were used, after the application of any actuarial gains to reduce the normal cost in accordance with subsection 7 (3).
1.1 The three-year period referred to in paragraph 1 must begin,
i. in the case of a pension plan that is not a jointly sponsored pension plan, on the valuation date, or
ii. in the case of a jointly sponsored pension plan, on a date not later than 12 months after the valuation date or, in the case of an inter-valuation report described in section 5.5, not later than January 1, 2007.
1.2. If the valuation date of a report filed under section 3, 13 or 14 is on or after December 31, 2006 and, at the valuation date, the amount determined under clause (a) of the definition of “going concern assets” in subsection 1 (2) is not less than the going concern liabilities determined using a benefit allocation method, the present value of the required contributions for the five-year period referred to in paragraph 1.3 must not be less than the present value of the contributions for that period that would be made in respect of the normal cost for the plan if the benefit allocation method were used, after the application of any actuarial gains to reduce the normal cost in accordance with subsection 7 (3).
1.3 The five-year period referred to in paragraph 1.2 must begin,
i. in the case of a pension plan that is not a jointly sponsored pension plan, on the valuation date, or
ii. in the case of a jointly sponsored pension plan, on a date not later than 12 months after the valuation date.
(2) Paragraph 2 of subsection 4 (2.3) of the Regulation is revoked and the following substituted:
2. If, at the valuation date of a report filed under section 3, 13 or 14, the amount determined under clause (a) of the definition of “going concern assets” in subsection 1 (2) is less than the going concern liabilities determined using a benefit allocation method, the present value of the required contributions, which are determined under the actuarial cost method used by the plan, must not be less than the sum of the present value of the normal cost and the present value of the special payments determined in accordance with section 5 that would be required to liquidate any going concern unfunded liability determined using the benefit allocation method.
(3) Subsection 4 (2.3) of the Regulation is amended by adding the following paragraph:
2.1 The present values referred to in paragraphs 1, 1.2 and 2 shall be determined without reference to paragraphs 7 and 10 and without reference to subsections (2.7) and (2.7.1).
(4) Paragraph 3 of subsection 4 (2.3) of the Regulation is revoked and the following substituted:
3. The rate or rates of interest to be used in calculating present values referred to in paragraphs 1, 1.2 and 2 shall be the rate or rates used in the report for the going concern valuation.
3.1 For the purposes of paragraphs 1, 1.2 and 2, the going concern valuation prepared using the benefit allocation method shall use the same rate or rates of interest as those used in the going concern valuation prepared using the actuarial cost method used by the plan.
(5) Paragraph 4 of subsection 4 (2.3) of the Regulation is revoked and the following substituted:
4. In the case of a pension plan that is not a jointly sponsored pension plan, the present values referred to in paragraph 2 shall be calculated using whichever of the following periods is longer:
i. The period that begins on the valuation date and continues until the end of the remaining amortization period of the going concern unfunded liability that has the longest remaining amortization period.
ii. The period of three years that begins on the valuation date.
4.1 In the case of a jointly sponsored pension plan, the present values referred to in paragraph 2 shall be calculated using whichever of the following periods is longer:
i. The period that begins on a date not later than 12 months after the valuation date or, in the case of an inter-valuation report described in section 5.5, not later than January 1, 2007, and continues until the end of the remaining amortization period of the going concern unfunded liability that has the longest remaining amortization period.
ii. The period of three years that begins on a date not later than 12 months after the valuation date or, in the case of an inter-valuation report described in section 5.5, not later than January 1, 2007.
(6) Subparagraph 4 ii of subsection 4 (2.3) of the Regulation, as remade by subsection (5) of this section, is amended by striking out “three years” and substituting “five years”.
(7) Subparagraph 4.1 ii of subsection 4 (2.3) of the Regulation, as made by subsection (5) of this section, is amended by striking out “three years” and substituting “five years”.
(8) Paragraph 5 of subsection 4 (2.3) of the Regulation is revoked and the following substituted:
5. In the case of a jointly sponsored pension plan,
i. the present values referred to in paragraph 1 shall be calculated based on the sum of the projected pensionable earnings for each year in the three-year period referred to in that paragraph,
ii. the present values referred to in paragraph 1.2 shall be calculated based on the sum of the projected pensionable earnings for each year in the five-year period referred to in that paragraph,
iii. the present values referred to in paragraph 2 shall be calculated based on the period used for the purposes of paragraph 4.1 and the sum of the projected pensionable earnings for each year in that period, and
iv. the actuarial assumptions used to determine the sums referred to in subparagraphs i, ii and iii of the projected pensionable earnings shall be consistent with those used in the report for the going concern valuation based on the benefit allocation method.
(9) Paragraph 6 of subsection 4 (2.3) of the Regulation is amended by striking out “with the Canada Pension Plan” and substituting “with the Canada Pension Plan or the Quebec Pension Plan”.
(10) Paragraph 7 of subsection 4 (2.3) of the Regulation is revoked and the following substituted:
7. If the required contribution rate set out in a report filed under section 3 or 14 in respect of a jointly sponsored pension plan is higher than the required contribution rate determined in the last report filed under section 3, 13 or 14, the required contribution rate may be increased each year for up to three years, commencing not later than 12 months after the valuation date, by at least one third of the difference between the two contribution rates, but only if,
i. the contribution rate after that period is a level percentage of pensionable earnings, subject to any variation that is necessary in order to take into account integration with the Canada Pension Plan or the Quebec Pension Plan, and
ii. the present value of the required contributions using the increased rates is not less than,
A. the present value of the contributions that would be made in respect of the normal cost for the plan if the benefit allocation method were used, after the application of any actuarial gains to reduce the normal cost in accordance with subsection 7 (3), if paragraph 1 or 1.2 applies, or
B. the sum of the present value of the normal cost and the present value of the special payments determined in accordance with section 5 that would be required to liquidate any going concern unfunded liability determined using the benefit allocation method, if paragraph 2 applies.
8. For the purposes of paragraph 7, the determination of whether the required contribution rate set out in the report is higher than the required contribution rate determined in the last filed report shall be made without taking into account the ability to increase required contribution rates each year for up to three years under that paragraph, and without taking into account the ability to carry forward amounts under paragraph 10 to reduce those increases.
9. The present values referred to in subparagraph 7 ii shall be calculated using the same period as was used to calculate the present values referred to in paragraph 1, 1.2 or 2, whichever is applicable.
10. If paragraph 7 permits the required contribution rate to be increased each year for up to three years and the amount of any increase in the first or second year exceeds one third of the difference between the required contribution rate set out in the report and the required contribution rate determined in the last filed report, the excess may be carried forward to the following year or years and used to reduce the increases in the following year or years, as long as the present value of the required contributions using the increased rates, as adjusted, is not less than the present value referred to in sub-subparagraph 7 ii A or B, whichever is applicable.
(11) Subsection 4 (2.6) of the Regulation is revoked and the following substituted:
(2.6) If a report filed under section 3 or 14 discloses, in respect of a jointly sponsored pension plan for which a benefit allocation method is used to set contribution rates, that an increase in the normal cost is required or that an increase is required in the amount of contributions that were previously reduced under subsection 7 (3), payment of that increase shall commence on a date not later than 12 months after the valuation date.
(12) Subsection 4 (2.7) of the Regulation is revoked and the following substituted:
(2.7) If a report filed under section 3 or 14 discloses that there is a going concern unfunded liability that is required to be liquidated in respect of a jointly sponsored pension plan for which a benefit allocation method is used to set the contribution rates, the special payments in respect of the going concern unfunded liability, as determined in accordance with subsection 5 (1.2), may be increased each year for up to three years, commencing not later than 12 months after the valuation date or, in the case of an inter-valuation report described in section 5.5, not later than January 1, 2007, by at least one third of the special payments, but only if,
(a) the special payments after that period are a level percentage of pensionable earnings for each class of members, subject to any variation that is necessary in order to take into account integration with the Canada Pension Plan or the Quebec Pension Plan; and
(b) the present value of the special payments, including the increased special payments, over the amortization period is not less than the amount of the going concern unfunded liability.
(13) Section 4 of the Regulation is amended by adding the following subsection:
(2.7.1) If subsection (2.7) permits the special payments in respect of the going concern unfunded liability, as determined in accordance with subsection 5 (1.2), to be increased each year for up to three years, and the amount of any increase in the first or second year exceeds one third of the special payments, the excess may be carried forward to the following year or years and used to reduce the increases in the following year or years, as long as the present value of the special payments, including the increased special payments, as adjusted, over the amortization period is not less than the amount of the going concern unfunded liability.
3. (1) Paragraph 1 of subsection 5 (1.2) of the Regulation is revoked and the following substituted:
1. Each scheduled payment must be a level percentage of the sum of pensionable earnings of the members of the pension plan at the valuation date projected to the date when the scheduled payments commence and, after that date, projected annually until the end of the amortization period without reference to,
i. changes in the membership of the plan that may occur after the valuation date and that arise from termination of employment or membership, the retirement or death of members or the addition of new members to the plan, or
ii. any other changes in the membership of the plan that may occur after the valuation date.
1.1 Despite paragraph 1, if there is reason to believe that there will be a material decline in the number of members before the end of the amortization period, the sum in paragraph 1 of the projected pensionable earnings must reflect the expected decline in the sum of projected pensionable earnings.
(2) Paragraph 2 of subsection 5 (1.2) of the Regulation is revoked and the following substituted:
2. The sum in paragraph 1 of the projected pensionable earnings must be determined based on actuarial assumptions that are consistent with those used to project pensionable earnings in the going concern valuation based on the benefit allocation method.
(3) Paragraph 3 of subsection 5 (1.2) of the Regulation is amended by striking out “clause (1.1) (a)” and substituting “subsection (1.1)”.
4. (1) Subsection 14 (7) of the Regulation is amended by adding the following clauses:
(c.1) the special payments remaining to be paid after the valuation date with respect to the going concern unfunded liability determined in any of the previously filed reports;
(c.2) if there is a going concern unfunded liability in the report, the amount of the going concern unfunded liability and the special payments required to liquidate it in accordance with section 5;
(2) Clause 14 (8.1) (a) of the Regulation is revoked and the following substituted:
(a) if the plan is not a jointly sponsored pension plan, set out the contribution rate or rates that are required under the pension plan;
(a.1) if the plan is a jointly sponsored pension plan, set out the required contribution rate or rates that are determined in accordance with paragraph 6 of subsection 4 (2.3) and, if applicable, the required contribution rates that are determined in accordance with paragraph 7 or 10 of that subsection;
5. Subsection 19 (10) of the Regulation is revoked.
6. (1) The heading before section 30 of the Regulation is revoked and the following substituted:
defined benefit plan wind ups
(2) Subsection 30 (1) of the Regulation is revoked and the following substituted:
(1) This section applies to a pension plan that provides defined benefits guaranteed in whole or in part by the Guarantee Fund.
(3) Clause 30 (2) (b) of the Regulation is amended by striking out “and” at the end of subclause (v) and by adding the following subclause:
(v.1) benefit enhancements resulting from the application of section 74 of the Act, and
(4) Subclause 30 (2) (b) (ix) of the Regulation is revoked.
7. Section 60 of the Regulation is revoked.
8. (1) Subject to subsections (2) and (3), this Regulation comes into force on the day it is filed.
(2) Section 1, subsections 2 (1), (2), (4), (5), (8), (9) and (12) and section 3 shall be deemed to have come into force on December 31, 2004.
(3) Subsections 2 (3), (6), (7), (10), (11) and (13) and section 4 come into force on December 31, 2006.