In May, the Ontario Government announced updates to Defined Benefit (DB) pension funding requirements expected to begin by the end of this year.
In the interim, the government announced that transitional measures for solvency relief are available to companies who require a valuation report within 2017.
Those who perform a valuation between December 31, 2016 and December 31, 2017 are provided Option 8 – a deferral of up to 24 months for the special payments required to fund any new solvency deficiency determined as of the valuation date. However, a plan sponsor is not permitted to elect Option 8 if Solvency Relief Option 7, which was established in 2016 and allows any new solvency deficiency payments to be amortized over a period of up to ten years, has been implemented in the same valuation report.
This transitional measure provides time for companies as they use the new funding framework requirements while preparing a valuation, however Option 8, as stated above, is only offered to those who perform a valuation during the prescribed period and will not be available to all DB plans.
If plan sponsors do choose to exercise Option 8, they’re required to notify all members but do not require member approval.
Find additional information here.