Pension Benefits Standards Regulations, 1985

9 (1) In this section unfunded liability means

• (a) the going concern deficit of a plan as determined on the date that the plan was established;

• (b) the amount by which an increase in the going concern liabilities of a plan resulting from an amendment to the plan exceeds the going concern excess of the plan as determined on the day before the effective date of the amendment; or

• (c) the amount by which the going concern deficit of a plan determined at the valuation date exceeds the present value of going concern special payments of the plan established in respect of periods after the valuation date.

(2) For the purposes of this section

• (a) the date of emergence of an unfunded liability in respect of an occurrence described in

  • (i) paragraph (1)(a) is the effective date of the plan,

  • (ii) paragraph (1)(b) is the effective date of the amendment, and

  • (iii) paragraph (1)(c) is the valuation date;

• (b) the date of emergence of a solvency deficiency is the date of the valuation that identified the deficiency; and

• (c) the interest rate used to determine the present value of going concern special payments referred to in paragraph (1)(c) is the same as the interest rate used to determine the going concern liabilities of the plan at the valuation date.

(3) An unfunded liability of a plan shall be funded by going concern special payments sufficient to liquidate the unfunded liability by equal annual payments over a period of 15 years from the date on which the unfunded liability emerged.

(4) A plan shall be funded in each plan year as follows:

• (a) by a contribution equal to the normal cost of the plan,

• (b) by going concern special payments;

• (c) if there is a solvency deficiency, by annual solvency special payments equal to the amount by which the solvency deficiency divided by 5 exceeds the amount of going concern special payments that are payable during the plan year;

• (d) if there is an additional solvency deficiency referred to in subsection (12), by additional annual solvency special payments payable from the effective date of the amendment and equal to the amount by which the additional solvency deficiency divided by 5 exceeds the going concern special payment in respect of the unfunded liability emerging from the amendment to the plan; and

• (e) by an amount required to be paid by an employer under a defined contribution provision.

(5) The amount required under paragraph (4)(a) or (e) may be reduced by all or a portion of the lesser of

• (a) the going concern excess, and

• (b) the amount by which the solvency assets exceed the solvency liabilities multiplied by 1.05.

(6) If an unfunded liability or solvency deficiency is liquidated at a rate greater than the sum of the special payments required under paragraph (4)(b),(c) or (d) by the making of an additional payment, the amount of a special payment for a subsequent plan year may be reduced if the outstanding balance of an unfunded liability will at no time be greater than it would have been had the going concern special payments referred to in paragraph (4)(b) been made.

(7) If the aggregate of the present value of going concern special payments referred to in paragraph (1)(c) exceeds the going concern deficit, this excess shall be applied to reduce the outstanding balance of any unfunded liability and the going concern special payments remaining to be made in respect of the unfunded liability shall be reduced pro rata.

(8) The average solvency ratio for a valuation date is the arithmetic average of the solvency ratios at the valuation date, the prior valuation date and the prior second valuation date adjusted as follows:

• (a) the solvency ratio at the valuation date shall be adjusted to remove the effect of any amendment made after the prior second valuation date that retroactively increases or decreases the plan benefits;

• (b) the solvency ratio at the prior valuation date shall be adjusted to remove the effect of any amendment made after the prior second valuation date and before the prior valuation date that retroactively increases or decreases the plan benefits;

• (c) the solvency ratios at the prior valuation date and the prior second valuation date may be adjusted to increase the solvency assets by an amount not in excess of the present value of any special payment made in respect of the period between the prior valuation date and the valuation date, or in respect of the period between the prior second valuation date and the valuation date, as the case may be, but not including an additional payment referred to in subsection (6) that will be applied to reduce special payments in respect of periods after the valuation date;

• (d) the solvency ratio at the valuation date shall be adjusted by reducing the solvency assets at the valuation date by the amount of an additional payment referred to in subsection (6) that will be applied to reduce special payments in respect of periods after the valuation date;

• (e) the solvency ratios at the prior valuation date and the prior second valuation date shall be adjusted to reduce the solvency assets by the present value of any reduction made under subsection (5) or under subsection (7.1) as that subsection read immediately before this section comes into force, between the prior valuation date and the valuation date or between the prior second valuation date and the valuation date, as the case may be; and

• (f) the solvency ratios at the prior valuation date and the prior second valuation date shall be adjusted to reflect the transfer into the plan of all of the assets of another plan between the prior valuation date and the valuation date or between the prior second valuation date and the valuation date, as the case may be, by including the assets of the transferring plan as solvency assets and the liabilities of the transferring plan as solvency liabilities.

(9) The average solvency ratio shall be adjusted to include the effect at the valuation date of any amendments referred to in paragraph (8)(a) or (b).

(10) The interest rate used to determine the present value of the special payments referred to in paragraphs (8)(c) and the present value of the reductions referred to in paragraph (8)(e) shall be the same interest rate that was used to determine the solvency liabilities of the plan on the prior valuation date or the prior second valuation date, as the case may be.

(11) The solvency ratio at the valuation date, without the adjustments made under subsection (8) or (9), may be used as the solvency ratio for a prior valuation date or prior second valuation date in respect of which no actuarial report was filed for the plan in accordance with subsection 12(3) of the Act.

(12) An additional solvency deficiency resulting from an amendment to the plan is equal to the amount by which the increase in solvency liabilities determined in accordance with subsection (13) exceeds the solvency excess at the day before the effective date of the amendment.

(13) If an amendment to the plan increases the solvency liabilities, the increase in solvency liabilities shall be valued using the actuarial assumptions and methods used in the solvency valuation of the actuarial report filed or due to be filed under subsection 12(3) of the Act for the most recently completed plan year in relation to the effective date of the amendment.

(14) Payments to a plan shall be made as follows:

• (a) the normal cost of the plan shall be paid in equal instalments or as a percentage of the anticipated remuneration to be paid to the members during the plan year and shall be paid not less frequently than monthly and not later than 30 days after the end of the period in respect of which the instalment is paid;

• (b) any special payment to be made during the plan year shall be paid not less frequently than monthly and not later than 30 days after the end of the period in respect of which the instalment is paid;

• (c) the contributions of plan members shall be remitted to the administrator not later than 30 days after the end of the period in respect of which such contributions were deducted; and

• (d) the administrator shall immediately pay into the fund any amount remitted to the administrator.