December 20, 2021
Manitoba Government Takes Steps to Strengthen Pension Plans and the Pension Regulatory System
– – –The Pension Benefits Amendment Act Takes Effect Dec. 20: Fielding
The Manitoba government has amended the Pension Benefits Regulation, the Solvency Exemption for Public Sector Pension Plans Regulation and the Solvency Exemption for Specified Non-Profit Sector Pension Plans Regulation to strengthen pension plans and the pension regulatory system, Finance Minister Scott Fielding announced today.
“These amendments will provide funding relief to pension plans and strengthen the pension regulatory system, while ensuring a strong pension framework in Manitoba,” said Fielding.
The minister said these changes to the Pension Benefits Regulation establish new rules for funding of private-sector defined benefit pension plans. Specifically, the amendments reduce the solvency deficiency threshold at which special payments must be made to 85 per cent from 100 per cent, while requiring plans be better funded on a going concern basis by adding a provision for adverse deviation (PfAD) and shortening the amortization period for unfunded liabilities. This change will bring Manitoba in line with what several other jurisdictions have already done.
The amendments also change how plan surpluses can be utilized, including surplus funds held within a solvency reserve account, and allow for re-amortization of solvency deficiencies and unfunded liabilities after each plan valuation. The lower threshold for solvency payments is intended to help lessen the volatility of required payments that must be made by employers in times of market downturns or reduced government bond rates, while the shorter amortization period for unfunded liabilities and new PfAD requirements will ensure workers' pensions continue to be protected, noted the minister.
“As a not-for-profit focused on conservation and managing North America’s wetlands, Ducks Unlimited Canada welcomes the funding changes to the Manitoba Pension Benefits Regulation,” said Marcy Sullivan, chief financial officer, Ducks Unlimited Canada. “The changes to the solvency funding requirements will reduce the funding volatility of our pension plan. This will assist our planning and budgeting process and will improve management of cash flows that will enable the organization to continue our mission. The enhanced going concern funding requirements and the introduction of solvency reserve accounts will continue to ensure pension benefit security for our plan members.”
“The changes to the Manitoba Pension Benefits Regulation are welcome updates, helping align our operations in a competitive business environment while providing retirement security for our valued employees,” said Ann Evans, chief financial and operating officer, Canadian Kraft Paper. “We support the move to increase going concern funding requirements while reducing the emphasis on solvency funding. This change and the consolidation of special payments allows our company to better manage cash flows and budgeting, supporting employment in the region while ensuring assets are available to provide the pension benefits promised. The modernization of the Pension Benefits Act strikes a strong balance between protecting retirement benefits for members and making defined benefit pension plans affordable for employers on an ongoing basis.”
The changes to the Pension Benefits Regulation take effect today to ensure plans that have a valuation report completed as of Dec. 31 will be able to benefit from the new rules.
Proclamation of relevant sections of Bill 8 – the Pension Benefits Amendment Act, which received royal assent earlier this year, and related amendments to the Solvency Exemption for Public Sector Pension Plans Regulation and the Solvency Exemption for Specified Non-Profit Sector Pension Plans Regulation also occurs today.
The amendments to both the act and regulations have been made in response to recommendations made by the Pension Commission of Manitoba, which is supportive of the changes, following public consultations that concluded in 2018 where more than 1,800 Manitobans provided feedback.
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