ARTICLE · 16 DECEMBER 2011

Defined Benefit Pension Plans: The Temporary Funding Relief Measures Will Likely Be Extended!

Lavery

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Since the financial crisis of 2008, defined benefit pension plans have been confronted with a major problem, that is the problem of solvency deficiencies.

CanadaEmployment and HR

François Parent

Since the financial crisis of 2008, defined benefit pension plans have been confronted with a major problem, that is the problem of solvency deficiencies. Over the last two years, this problem has been raised on several occasions by various news media. Due to the historically low long-term interest rates and the decline of stock markets, numerous defined benefit pension plans are currently showing substantial solvency deficiencies. Because the rules provided for in the Supplemental Pension Plans Act¹ (the "SPPA") require most employers to eliminate these deficiencies over a 5-year period by paying additional contributions, many businesses are forced to use a significant part of their assets for the payment thereof.

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