In May 2011, the government provided temporary solvency funding relief to public-sector SEPPs. The relief is provided in two stages, with eligibility criteria attached to each stage. In exchange for the relief, plans commit to explore plan changes that would improve sustainability and affordability in the long term.
Since the introduction of the program, many of the plans that entered into the relief regime have made significant progress towards long-term sustainability. However, continued low long-term interest rates and volatility in financial markets still present a significant risk for pension plans.
The government announced in its 2013 Budget that it “will consider regulatory amendments that provide additional relief of solvency funding obligations for public-sector SEPPs that have taken steps to put their plans on a sustainable track,..”.
In accordance with the Budget announcement, the government is proposing the following measure:
Amend Regulation 178/11 under the Pension Benefits Act (PBA) to provide the employer sponsor of a pension plan that has a Stage Two valuation date on or before December 31, 2014, as listed in Schedule 2 of the regulation 178/11, the choice between: