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Regulatory amendments from the review of the solvency funding framework for defined benefit pension plans under the Pension Benefits Standards Act

Reforms to British Columbia’s solvency funding framework were developed based on extensive consultation with stakeholders and experts from October 2018 to August 2019.

The objective of the review was to address plan and payment sustainability, benefit security, and pension coverage in a way that balances the needs of employers and members.

The order in council makes the following reforms by amending the Pension Benefits Standards Regulation, effective Dec. 31, 2019:

  • Solvency funding requirements will be reduced to 85% from 100%.
  • Payments for going-concern deficits will be required over 10 years rather than 15 years.
  • A new funding buffer will be established to reduce long-term interest rate risk.
  • A solvency ratio of 100% will continue to be required for contribution holidays and withdrawal of a plan’s going-concern excess funds. The threshold for excess funds will increase to protect the new funding buffer.
  • Changes to the superintendent of pensions’ ability to restrict benefit improvements that would result in a solvency ratio of at least 85%, from 90%.
  • Single employers will be able to offer a target benefit plan.