Canadian Institute of Actuaries announces delay in new commuted value standard
On July 26, 2018, the Canadian Institute of Actuaries (CIA) announced a delay in its new commuted value standard. The CIA stated that the earliest possible implementation date is sometime in the second calendar quarter of 2019.
The CIA noted a move towards increased focus on the long-term sustainability of defined benefit pension arrangements with less emphasis on shortterm benefit security (i.e., solvency funding). This move poses many challenges in defining what may be a fair transfer value for terminating pension plan members while at the same time taking into account the risk to remaining plan members and other stakeholders.
Based on a review of the over 30 responses received to the initial draft proposals, the CIA working group will submit a revised draft to the Actuarial Standards Board for review. It is expected that the nature of the changes proposed will require additional consultations among CIA members.
The delay in implementing a revised standard for calculating commuted values will be a disappointment to pension plan administrators who are hoping for reduced commuted value payouts under the new standard. We will continue to keep you updated with new developments.