Human Resources Legislative Update
Federal Government Proposes Transitional Pension Funding Relief Regulations (Canada Post)
Date: December 23, 2013
On December 21, 2013, the federal government published proposed transitional pension funding relief regulations that would temporarily relieve Canada Post Corporation from the requirement to make special payments to its defined benefit employee pension plan, as ordinarily required under the Pension Benefits Standards Act, 1985 (“PBSA”), for a period of four years. The proposed amendments are intended as “one-time transitional assistance” to permit the Corporation to address its $6.5 billion pension plan solvency deficit. During this period, the Corporation will only be required to fund the normal costs of the pension plan; no special payments will be required.
In the event of the pension plan’s termination, the Canada Post Corporation Pension Plan Funding Regulations (“proposed Regulations”) would require payment in full of all normal costs owing for that year, after which the plan termination payment rules under the PBSA and Pension Benefits Standards Regulations, 1985 (“PBSR”) would apply.
The proposed Regulations would require the Corporation to provide specific annual disclosure to plan members and retirees, in addition to the normal disclosure obligations outlined in the PBSR. The additional disclosure requirements include the plan’s solvency deficit, information about the special payment relief period (2014 to 2017, inclusive), and an outline of the payments that would have been required to be made under the normal funding rules for that relief period.
Finally, the proposed Regulations prescribe a solvency ratio of one for the purposes of the provisions of the PBSA that prohibit benefit improvements if costs of the improvement would result in the solvency ratio of the pension plan falling below the prescribed level.
The proposed Regulations would come into force on registration, and repeal automatically on January 1, 2018.
Stakeholders and interested persons may make comments upon the proposed Regulations by January 5, 2014.