Alberta provides defined benefit funding and other forms of relief for administrators
Effective June 24, 2020, the Alberta Employment Pension Plans Regulation (the Regulation) was amended to provide for a number of COVID-19 relief measures in light of the COVID-19 pandemic and economic downturn. Among other measures, the amendment enables administrators of Alberta registered pension plans to apply to the Superintendent of Pensions for the temporary suspension of special payments and other forms of defined benefit (DB) and target benefit funding relief. The Alberta Superintendent of Pensions also released an updated guidance document, EPPA Update 20-04, summarizing the amended Regulation.
Suspension of special payments
Under the amended Regulation, administrators of DB and target benefit pension plans registered in Alberta can apply to be exempted from the requirement to make unfunded liability (i.e., going concern liability) and solvency deficiency payments (collectively known as special payments) through the end of 2020.
The Superintendent has indicated that any experience losses attributable to the contribution suspension must be identified in the plan’s next actuarial valuation report. These experience losses must be amortized over a period not exceeding 15 years.
The amended Regulation permits collectively bargained multi-employer plans that are otherwise required to make contributions in respect of a Provision for Adverse Deviation (PfAD) on current service contributions to seek an exemption from making such contributions in 2020.
Funding excess limit increased
The amended Regulation also permits Alberta plan administrators to apply for a temporary increase to the limit of funding excess to reduce or eliminate current service contributions for a single fiscal year.
Under the existing Regulation, DB plans that are funded above 105% on a going concern basis can use up to 20% of this funding excess to reduce or eliminate current service contributions. Approved plans will be permitted to use up to 40% of their going concern funding excess against their current service contributions for a single fiscal year.
The aforementioned relief measures are not automatic. Rather, plan administrators seeking to access relief under the temporary measures must apply to the Alberta Superintendent of Pensions. The relief will not be effective until the Superintendent has approved the application, but can be retroactive to June 24, 2020.
An application for relief must provide that the plan will not move to improve benefits while receiving the relief. Applications should also include the plan’s estimated financial position (on both a going concern and solvency basis) as of the date of application, as well as the rationale for seeking funding relief.
Electronic information and records
The Regulation is amended to provide that any statement, notice, document or other record or piece of information required to be sent or filed may be provided electronically in accordance with the Alberta Electronic Transactions Act. Previously, the Regulation did not address electronic communication.
This amendment does not affect beneficiary designations, as electronic beneficiary designations are under separate legislation.
Witness signatures on waiver forms
Previously, on June 3, 2020, the Alberta Superintendent of Pensions issued EPPA Update 20-03, which provided for temporary relief to witness signature requirements for spousal waiver forms.
In order to allow plan administrators to comply with social distancing guidelines, requirements for witness signatures on spousal waiver forms contained in Schedule 6 of the Regulation have been relaxed. While such forms continue to require witness signatures, such signatures may be delayed by up to 60 days. A pension plan administrator may still pay benefits even if the witness statement on the waiver has not been signed during this period. After 60 days, if the waiver remains unsigned, the administrator must adjust benefits as if the member had not selected the option requiring the waiver form.
Despite these changes, the Superintendent’s office encourages administrators to obtain a witness signature wherever possible.
Notices of member contribution rate reductions
EPPA Update 20-03 also provided relief to the requirement to provide notice of changes to member required contribution rates.
Under section 44(1) of the Regulation, if member required contributions are to be changed, the administrator must provide members notice of the change at least 30 days in advance. In order to ease the burden on employers seeking to reduce contribution rates in light of the current economic situation, such notices may temporarily be issued within 60 days after implementation of the change. This change applies only to reductions in employee contribution rates and not to employer contributions.
The two changes in EPPA Update 20-03 come into effect retroactively to March 17, 2020, and will expire automatically 60 days after the public health emergency in Alberta comes to an end.