Directives of the Superintendent pursuant to the Pension Benefits Standards Act, 1985

Date: June 2011

  1. (1) In these directives

    “Act”

    means the Pension Benefits Standards Act, 1985;

    "Regulations"

    means the Pension Benefits Standards Regulations, 1985;

    “solvency ratio”

    has the same meaning as defined in section 2 of the Pension Benefits Standards Regulations, 1985;

    “transfer deficiency”

    means the amount, if any, by which the pension benefit credit exceeds the transfer value of a pension benefit credit that is described in paragraph 8(b), Text for screen readers: 8(b) = 8(2), of these Directives;.

    (2) Except as where otherwise provided herein, the definitions contained in the Act and Regulations apply.

  2. Unless the Superintendent directs otherwise, the actuarial reports referred to in subsection 12(2) of the Act shall be prepared,
    1. where an application for registration under subsection 10(1) of the Act is filed, as at the effective date of the plan,
    2. where the solvency ratio disclosed in the most recent actuarial report filed under subsection 12(2) of the Act that valued the pension plan as at a date after December 30, 2008 and before December 31, 2009 was below one, as at the end of the plan year starting in 2009,
    3. except as provided in paragraph (d), (e) and (f), Text for screen readers: (d), (e) and (f) = 2(4), 2(5) and 2(6), as at the first plan year end after December 31, 2009 and thereafter as at each subsequent plan year end,
    4. in the case of a pension plan
      1. where the solvency ratio disclosed in the most recent actuarial report filed under subsection 12(2) of the Act that valued the pension plan as at a date before December 31, 2009 was one, or
      2. where the solvency ratio disclosed in the most recent actuarial report filed under subsection 12(2) of the Act or prepared by a designated actuary that valued the pension plan as at a date on or after December 31, 2009 was 1.20 or greater, as at the end of the plan year that is not later than three years after the date of the most recent actuarial report filed under subsection 12(2) of the Act or prepared by a designated actuary,
    5. in the case of a pension plan where the solvency ratio disclosed in the most recent actuarial report filed under subsection 12(2) of the Act that valued the pension plan as at December 31, 2009 or January 1, 2010 was one or greater, as at the end of the plan year that is not later than January 1, 2012,
    6. in the case of a pension plan that meets the definition of a designated pension plan under section 8515 of the Income Tax Regulations, as at the end of the plan year that is not later than three years after the date of the most recent actuarial report filed under subsection 12(2) of the Act or prepared by a designated actuary, and
    7. as at the effective date of an amendment to the pension plan which alters the cost of pension benefits or other benefits under the plan.
  3. (1) Subject to subsection (2), the auditor’s report of the pension fund referred to in paragraph 15(1)(c) of the Regulations shall be prepared as at the end of the plan year

    (2) An auditor’s report of the pension fund that has not been established by or under a Pension Fund Society is not required to be filed if the pension fund is held as follows:

    1. all funds are held by one insurance company in any type of account, or
    2. all funds are held in the pooled funds of one trust company, or
    3. all funds are held by one trust company but not in its pooled funds and the fair market value of the total assets of the pension fund is less than $5,000,000.
  4. The documents referred to in sections 2 and 3 of these Directives shall be filed with the Superintendent within six months of the date of preparation, or within such longer period as the Superintendent may on application allow.
  5. Following the termination of a pension plan, the actuarial report referred to in subsection 24.1(4) of the Regulations shall be prepared annually as at the anniversary of the effective date of termination and shall be filed with the Superintendent within six months of the valuation date.
  6. For the purposes of paragraph 19(2)(a) of the Act the interest rate that is fixed is the average of the yields of the 5 year personal fixed term chartered bank deposit rate (published monthly by the Bank of Canada ), over a reasonably recent period, the averaging period not to exceed twelve months.
  7. For the purposes of subsection 23(6) of the Act the part of the group life insurance payment that can be considered to have been paid by employer premiums shall not be greater than the amount of the group life insurance benefit multiplied by the ratio of the employer-paid cost of the policy to the total cost of the policy for the class of employees, taking into account in both the numerator and denominator of the ratio any experience or other refunds to the employer, with such ratio averaged over a period not exceeding five years.
  8. Pursuant to section 26.1 of the Act consent is given to the transfers of moneys out of a pension fund in accordance with paragraphs 26(1)(a) and (b), paragraphs 26(2)(a) and (b) and paragraphs 26(3)(b)(i) and (ii) of the Act, for members who cease membership from their pension plan or for survivors subject to the following terms and conditions:
    1. except as provided in paragraph (c), Text for screen readers: (c) = 8(3), the amount of the initial transfer under section 26 of the Act cannot exceed the transfer value
    2. the transfer value of a pension benefit credit shall be calculated by multiplying the pension benefit credit, determined in accordance with subsections 18(1) and (2) of the Regulations, by the solvency ratio of the plan
    3. where a plan has a solvency ratio that is less than one, the full value of the pension benefit credit may be transferred where
      1. the administrator of the plan is satisfied that an amount equal to the transfer deficiency has been remitted to the fund, or
      2. the transfer deficiency for any individual transfer is less than 5% of the Year's Maximum Pensionable Earnings for that year provided that the aggregate value of all transfer deficiencies paid since the effective date of the most recent actuarial report does not exceed 5% of the assets of the plan at that date.
    4. Where the full value of the pension benefit credit is not transferred, the transfer deficiency shall be transferred on the earlier of:
      1. five years from the date of determination of the pension benefit credit and
      2. the date on which the solvency ratio of the plan is determined to be one, and shall include interest calculated in accordance with section 6 of these Directives.
  9. (1) For the purposes of this section, the “solvency ratio following the purchase of an annuity” is the solvency ratio set out in the most recent actuarial report adjusted to reflect the effect on the solvency ratio as a result of the purchase of an immediate or deferred life annuity described in this section.

    (2) Pursuant to section 26.1 of the Act, where a purchase of an immediate or deferred life annuity is to be made other than for the purposes of section 26 of the Act and does not settle all the liabilities of the plan, consent is given to that purchase by an administrator, subject to the following terms and conditions:

    1. the solvency ratio following the purchase of an annuity is not less than 0.85; or
    2. the administrator of the plan is satisfied that an amount has been paid to the pension fund to maintain the solvency ratio following the purchase of an annuity at the lesser of 0.85 and the solvency ratio of the plan set out in the most recent actuarial report.