On April 20, 2018, the Government of Ontario filed long anticipated amendments to the general regulations under the Pension Benefits Act, which significantly change the funding requirements for defined benefit pension plans. The regulations are the product of a public consultation begun by the Ontario government, initially announced in the 2015 Ontario Economic Outlook and Fiscal Review.

These amendments largely reflect funding changes proposed by the Ministry of Finance and posted to the Regulatory Registry in December of 2017. A summary of some of the more significant changes brought about by these amendments is set out below.

New Solvency Funding Requirements

For actuarial valuations with an effective date on or after December 31, 2017, defined benefit plans will no longer be required to fund to a 100% solvency funding target. As previously announced by the Ontario Government, defined benefit plan sponsors will only be required to make special payments on account of solvency deficiencies when the plan’s solvency funded status falls below 85%. Special payments in respect of such reduced solvency deficiencies arising after December 31, 2017 will still be required to be amortized over a five year period.

Decrease in Amortization Period of Going Concern Special Payments

For actuarial valuations with an effective date on or after December 31, 2017, going concern unfunded liabilities will now have to be amortized over a ten year period (rather than the current 15 years).

Introduction of Provision for Adverse Deviation (“PfAD”)

The funding of a plan’s annual normal cost and going concern liabilities is being strengthened through the introduction of a provision for adverse deviation (“PfAD”). The PfAD will require a plan’s normal cost and special payments in respect of any going concern unfunded liability to be increased according to a formula which takes into account a number of factors, including whether the plan is open or closed to new members and the plan’s asset allocation.

Increased Pension Benefit Guarantee Fund Assessments

Assessments in respect of the Pension Benefits Guarantee Fund (the “PBGF”) will be increased, effective January 1, 2019, to reflect the increase in PBGF benefits announced in Ontario’s 2018 budget.

Restrictions on Benefit Improvements

Amendments to the Pension Benefits Act introduced through the 2018 Ontario Budget include a provision restricting amendments to defined benefit plans providing defined benefits in prescribed circumstances. Under the new funding regulations, the prescribed circumstances rendering a benefit improvement amendment void are where either of the plan’s going concern or solvency ratio is at or below 80 per cent.

Contribution Holidays:

The regulation includes new rules governing contribution holidays. In general terms, contribution holidays will be available where a plan’s PfAD is fully funded and no special payments are being made to the plan, provided that the contribution holiday will not result in the plan’s transfer ratio below 1.05.

Member Statements

The statements required to be provided to members, deferred vested members and pensioners will have to include additional disclosures, including a description of the difference between going concern and solvency funding, and a statement that contributions for the provision for adverse deviations are required to be made to the plan.


These new funding requirements will not apply to jointly sponsored pension plans that are exempt from solvency funding requirements under the general regulations, nor to specified Ontario multi-employer pension plans.