Ontario Announces Major Changes To Defined Benefit Pension Plans

Changes move away from traditional solvency funding requirements and facilitate de-risking through the use of buy-out annuities

On May 19, the Ontario government announced that it intends to implement various changes to the funding rules for defined benefit pension plans and buy-out annuities. The government expects to introduce legislation later in 2017 to enable these changes and will consult with stakeholders on the details of the regulations.

What You Need To Know

Highlights of the new funding framework include:

• Eased Solvency Funding Rules: Solvency payments will only be required to be made with respect to a solvency deficiency if the plan's funded status falls below 85 per cent (solvency payments are currently required once a plan's funded status falls below 100 per cent).