The federal Department of Finance has released draft amendments to the regulations under the Pension Benefits Standards Act, 1985 (the “PBSA“) that would change solvency funding requirements and quantitative investment limits.
Under the proposed amendments, solvency funding would be calculated based upon a three-year average solvency deficiency. In order to qualify for a contribution holiday, the draft amendments would require a plan sponsor’s solvency ratio, the ratio of market value of assets to solvency deficiency, to be at least 1.05. The draft amendments would also remove the quantitative investment limits in the PBSA that limit the book value of the pension fund’s assets in a single parcel of real estate or Canadian resource property to 5%; the aggregate book value of the pension fund’s assets in Canadian resource properties to 15%; and, the aggregate book value of the pension fund’s assets in real estate and Canadian resource properties to 25%.
For more information on the draft amendments please see Heenan Blaikie’s Pension Pulse “Federal Government Tweaks Pension Solvency Funding Rules and Investment Limits”.