Manitoba: More solvency funding relief
On December 19, 2016, Manitoba amended its regulations to permit Manitoba-registered pension plans with a defined benefit (DB) component to extend the regular solvency amortization period from 5 to 10 years. The Manitoba Pension Commission has published Update 16-01 to summarize the 2016 version of solvency funding relief.
The extension applies to the first valuation date between December 30, 2016 and January 2, 2019, and can be applied only if fewer than 1/3 of members not receiving a pension and fewer than 1/3 of retired members and beneficiaries object. Prescribed notices must be given to members, beneficiaries and bargaining agents prior to the election being filed.
In order to take advantage of temporary solvency funding relief, employer contributions cannot be in arrears. Furthermore, a letter of credit cannot be applied in respect of special payments where the amortization period has been extended. Existing solvency deficiencies can be consolidated with the new 10-year funding schedule, with the exception of solvency deficiencies amortized under previous versions of temporary solvency funding relief.
Any benefit improvements during the first five years must be fully funded, and employee contributions may not be reduced during that time frame.
Manitoba’s Finance Minister has asked the Pension Commission to conduct a review of the Pension Benefits Act, as it is required to do every five years, and a report is expected to be completed sometime in mid-2017. This will include a review of solvency funding requirements in light of developments in other provinces such as Ontario and Quebec.