Air Canada Pension Plan Solvency Deficiency Funding Regulations (SOR/2004-174)

Regulations are current to 2017-11-20 and last amended on 2011-04-01. Previous Versions

 For the purposes of the Pension Benefits Standards Regulations, 1985, a payment that is required to be made in respect of a plan by section 9 or 13 or subsection 16(2) shall be considered a special payment.

 A plan shall be funded in each plan year by the special payments referred to in sections 9 and 13 in addition to the contributions and any applicable special payments set out in subsection 9(7) of the Pension Benefits Standards Regulations, 1985.

Actuarial Gain

 Until the 2006 plan year, an actuarial gain shall not be used to reduce the amount of any special payments due to the pension fund, but it may be applied to reduce the amortization period or periods applicable to the payment of a solvency deficiency or used to reduce, on a pro rata basis, the special payments required to fund the solvency deficiency during any of the 2006 to 2013 plan years.

Solvency Deficiency Emerging After 2004 Plan Year

 Except as provided in section 15, a solvency deficiency that emerges in a plan year that begins after the day on which these Regulations come into force shall be funded by equal annual special payments sufficient to liquidate the solvency deficiency over a period not exceeding the greater of

  • (a) the number of years remaining in the payment schedule referred to in section 9, calculated from the beginning of the plan year in which the solvency deficiency emerges, and

  • (b) five years.

Amendments to a Plan

 For the purpose of paragraph 10.1(2)(b) of the Act, the prescribed solvency ratio level is the solvency ratio calculated on the basis of the most recent actuarial report.

  • SOR/2011-85, s. 16.

Increase in Benefits

  •  (1) A solvency deficiency that emerges after the day on which these Regulations come into force and that results from an increase in pension benefits, pension benefit credits or other benefits payable under a plan shall be funded in accordance with subsection 9(4) of the Pension Benefits Standards Regulations, 1985.

  • (2) The present value of the special payments required to fund the solvency deficiency referred to in subsection (1) shall be included for the purpose of paragraph (d) of the definition solvency deficiency in subsection 9(1) of the Pension Benefits Standards Regulations, 1985.

Termination of Plan with a Deficit

  •  (1) In this section, deficit means the amount by which the liabilities of a plan exceed its assets.

  • (2) Subject to subsection (3), if a plan is fully terminated and the plan has a deficit as at the day of the termination, the annual payments due in respect of the principal outstanding amount of the promissory note that is issued in respect of the plan and referred to in section 4 of the Protocol shall be remitted to the pension fund as they become due and payable, until such time as the principal outstanding amount of that promissory note is paid or the deficit is eliminated, whichever is earlier.

  • (3) If the principal outstanding amount of the promissory note referred to in subsection (2) becomes due and payable in full as a result of the occurrence of an event of default under the terms of the promissory note, the annual payments referred to in that subsection are not required to be remitted.

PART 2Alternate Solvency Standards for Air Canada Pension Plans Applicable on Election

Election

  •  (1) Air Canada may elect to fund a plan, beginning on the first day of a plan year, in accordance with this Part by giving written notice of the election to the Superintendent not later than four months after the beginning of that plan year.

  • (2) The notice of election referred to in subsection (1) shall indicate whether or not the plan has a surplus as at the first day of the plan year in respect of which the election is made.

Application of the Pension Benefits Standards Regulations, 1985

 If the election referred to in subsection 17(1) is made in respect of a plan, section 9 of the Pension Benefits Standards Regulations, 1985 applies in respect of that plan except as otherwise provided in this Part.

Manner of Determining Surplus

 For the purposes of this Part, a surplus in respect of a plan shall be determined in the manner prescribed by subsection 16(1) of the Pension Benefits Standards Regulations, 1985 in respect of a plan that has been fully terminated and, in making that determination, the value of the assets of the plan shall be determined on the basis of market value.

Plan with a Surplus

 If the election referred to in subsection 17(1) is made in respect of a plan that has a surplus as at the first day of the plan year in respect of which the election is made, Part 1 continues to apply in respect of that plan, except that sections 4, 6 to 9 and 11 to 15 cease to apply in respect of the plan on that day.

Plan Without a Surplus

 If the election referred to in subsection 17(1) is made in respect of any of the 2005 to 2009 plan years of a plan that does not have a surplus as at the first day of the plan year in respect of which the election is made, Part 1 continues to apply in respect of that plan, except that

  • (a) Air Canada shall have an actuarial report prepared in respect of the plan as at that day;

  • (b) for the purpose of that actuarial report, the present value of the special payments referred to in sections 9 and 13 shall be zero;

  • (c) the solvency deficiency disclosed by the actuarial report, if any, shall be considered to have emerged as at the valuation date of the actuarial report;

  • (d) the special payments required to be made to the pension fund in accordance with sections 9 and 13 shall continue to be made until the first special payment required to fund the solvency deficiency referred to in paragraph (c) is remitted to the pension fund; and

  • (e) except as otherwise provided in paragraph (d), sections 4, 6 to 9 and 11 to 15 cease to apply in respect of the plan on the first day of the plan year in respect of which the election is made.

  •  (1) For the purposes of this section, paragraph (a) of the definition solvency deficiency in subsection 9(1) of the Pension Benefits Standards Regulations, 1985 shall be read as follows:

    • (a) the value of the assets of the plan, determined on the basis of market value,

  • (2) Subject to section 23, if the election referred to in subsection 17(1) is made in respect of any of the 2010 to 2013 plan years of a plan that does not have a surplus as at the first day of the plan year in respect of which the election is made, Part 1 continues to apply in respect of that plan, except that

    • (a) a solvency deficiency that is required to be funded in accordance with section 9 or 13 shall not be reamortized;

    • (b) the present value of the special payments referred to in sections 9 and 13 shall be included for the purpose of paragraph (d) of the definition solvency deficiency in subsection 9(1) of the Pension Benefits Standards Regulations, 1985; and

    • (c) section 4 and 6, subsection 7(4) and sections 8, 12 and 15 cease to apply in respect of that plan on the first day of the plan year in respect of which the election is made.

 If the aggregate amount of the remaining special payments required to be made in accordance with sections 9 and 13 in respect of a plan referred to in subsection 22(2) is remitted to the pension fund not later than the end of the second quarter of the plan year in respect of which the election is made,

  • (a) section 22 does not apply in respect of that plan; and

  • (b) Part 1 continues to apply in respect of that plan, except that sections 4, 6 to 9 and 11 to 15 cease to apply in respect of the plan on the first day of the plan year in respect of which the election is made.

Ceasing To Be in Force

 These Regulations cease to be in force on December 31, 2013.

Coming into Force

 These Regulations come into force on the day on which the initial order expires provided that that order expires before January 1, 2005.

 
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