Following up on the solvency funding relief for Alberta specified multi-employer pension plans (SMEPPs) which was passed last year, the Alberta government recently amended the Employment Pension Plans Regulation to also provide solvency funding relief to defined benefit plans which are not SMEPPs.
Notably, the regulation does not require any form of member consent, or lack of member objection, in order to implement the solvency funding relief. Defined benefit plans, which are not SMEPPs, may now apply to the Alberta Superintendent to:
- consolidate solvency funding deficiencies that are identified in actuarial valuation reports and cost certificates prepared as of the period beginning on December 31, 2011 and ending on December 31, 2012; and
- pay that consolidated solvency deficiency over a ten-year (rather than a five-year) amortization period, subject to certain conditions.
EPPA Update 12-01 indicates that these conditions include that the application be in writing and the plan administrator confirm that it agrees to comply with any other conditions that are set by the Superintendent, “which may apply on a plan-by-plan basis, following the Superintendent’s review of the application valuation.”
The Update confirms that where a valuation report has an effective date within the relevant period (e.g. as of December 31, 2011) the solvency funding relief measures can still be used. The Update sets out the required documentation for plan administrators that have already filed such a valuation report and have started to make contributions based on such a report.
Where benefits (other than ongoing pension payments) are to be paid from a plan that has taken advantage of the solvency funding relief measures, the regulations require that the employer make one single lump sum payment to the plan, in an amount that is equal to any transfer deficiency that exists in relation to that person. That payment must be made either before making the payment to the person, or must be included in the next remittance of contributions to the holder of plan assets.
Plan administrators will be permitted to make only one application to consolidate the solvency deficiencies and extend the amortization period under these regulatory amendments.