As mentioned in our May 2017 Blakes Alert: Ontario Government Announces New Funding Framework for Defined Benefit Pension Plans, the Ontario government had promised that transitional measures would be available to plan sponsors filing actuarial reports in 2017 in light of the changes to the funding rules that are expected to come into effect in 2018. While we are not expecting to see the details of the new funding rules until the fall, Ontario Regulation 225/17 was filed on e-Laws on June 29, 2017 and came into force on July 1, 2017, which sets out the new transitional measures.
The transitional measures provide an additional solvency relief option — Option 8 — which allows the deferral for up to 24 months of special payments required to fund any new solvency deficiency determined in an actuarial report with a 2017 date.
Option 8 cannot be combined with the 10-year amortization provided by Option 7.
Consistent with previous solvency relief measures, plan administrators will need to provide a Solvency Relief Notice to active, former and retired members and any applicable unions. No member consent is required.
Certain prescribed plans are not permitted to make an Option 8 election.
Many unanswered questions remain, including if, and how, letters of credit will operate when the new rules are effective.
We will send out a detailed bulletin as soon as the new funding rules are available.