In December 2017, Ontario released the highly anticipated details of its consultation on Reform of Ontario’s Funding Rules for Defined Benefit Pension Plans: Description of New Funding Rules (Consultation). Ontario has since finalized its new funding rules for defined benefit (DB) pension plans with the April 20, 2018 filing of O. Reg. 250/18 (Regulation). The Regulation follows a Consultation released in December 2017, that provided a description of proposed regulations and that was discussed in Eckler’s Special Notice, Ontario Defined Benefit Pension Funding Reform Moves Closer (December 21, 2017).
The funding rules outlined within the Regulation apply to actuarial valuations with a valuation date of December 31, 2017 or later, and filed after April 30, 2018. The new funding rules will not apply to specific jointly sponsored pension plans (JSPPs) or to Specified Ontario Multi-Employer Pension Plans (SOMEPPs), but will apply to multiemployer plans that are not SOMEPPs.
In addition to funding rules, the Regulation also details changes to the calculation of the annual Pension Benefits Guarantee Fund (PBGF) assessment. The new assessment formula, the subject of a Consultation released in January 2018, will take effect for assessment dates of January 1, 2019 and later. The 2018 Budget announced that the corresponding increase in the PBGF coverage limit to $1,500 per month, and the related elimination of age and service requirements for coverage, will be effective retroactively for plans wound up on May 19, 2017, or later.
This Special Notice provides an overview of the Regulation and the new funding framework, as well as details regarding the impact these new funding rules will have on affected Ontario-registered DB plans. Please contact your Eckler consultant to obtain more information about how these changes will affect your organization’s plans.