Changes to the funding framework for defined benefit pension plans will give employers the payment predictability needed to support the long-term sustainability of pensions that British Columbians depend on.
Members’ pensions will not be affected by the reforms. Defined benefit pension plans provide financial security and the goal of the reforms is to keep these plans as a viable and sustainable option in an uncertain global economy.
Strengthening going-concern funding requirements, while reducing solvency funding payments, will help protect people’s pensions by supporting the continued operation of the sponsoring employer.
These changes will help address long-standing funding pressures, such as low interest rates and volatile investment returns, that can make it difficult for businesses to sustain payments towards defined benefit pension plans.
The Province launched a review of solvency funding requirements in October 2018. The new funding rules were shaped by recommendations developed through stakeholder consultation with plan members, retirees, unions, employers and other pension-industry stakeholders.
Recommendations provided by two stakeholder committees were released for public feedback with the Ministry of Finance’s Report on Stakeholder Committee Process in August 2019.
In addition, a related change will permit a single employer to offer a target benefit plan.
All changes will come into effect on Dec. 31, 2019. The funding reforms will apply to defined benefit pension plans for their next valuation.
- British Columbia joins Quebec and Ontario in reforming defined benefit funding rules, including reductions to solvency funding requirements, in favour of a more sustainable going-concern funding approach.
Find out more about the Ministry of Finance’s consultation on solvency funding: http://www.gov.bc.ca/solvencyfundingconsultation
For more information on the Pension Benefits Standard Act, visit: https://www.bcfsa.ca/
A backgrounder follows.