Manitoba regulations: solvency funding relief and more
Manitoba has amended its pension regulations to provide for additional solvency funding relief, the use of letters of credit to cover solvency funding obligations, and increased fines for plan administrators. The changes came into effect on January 1, 2012.
Solvency relief will apply to the first valuation report filed before January 2, 2014, and will only be permitted for employers without payments in arrears. An employer will be permitted to consolidate past solvency deficiencies and the new solvency deficiency may be amortized over a new single ten-year period. Prior notice must be given to members and beneficiaries and no more than 1/3 of each group may object.
Employers with defined benefit plans (other than multi-unit pension plans) will now be able to use letters of credit, rather than cash, to fund all or part of a plan’s solvency deficiencies. The new regulation prescribes the requirements the letter of credit must meet in order to qualify and sets out the employer’s obligations, including paying the costs of obtaining and maintaining the letter of credit. A letter of credit may not be used if an employer elects solvency relief.
Employers will also be faced with higher administrative penalties for non-filing or late filing of plan amendments, annual information returns, audited financial statements, valuation reports, cost certificates, or termination reports. Penalties are based on the fee for the most recent annual information return, the number of days the filing is late, and multiple contraventions of the requirements, up to a maximum penalty of 100% of the annual information return filing fee or $10,000, whichever is less.
Finally, the fees payable with the annual information return have increased effective January 1, 2012. The fee is now $250 for a simplified defined contribution pension plan, and the lesser of $18,000 or $7.20 for each active member in any other plan. The minimum fee is $120 per plan.