Filing Requirements for Terminated Plans Funding a Deficit over Five (5) Years

The requirement for pension plans (other than Negotiated Contribution plans) to fully fund their pension benefit obligations determined on the date of plan termination has been in effect since April 1, 2011. If a pension plan has a deficit on plan termination, then the employer is required to pay the amount owed under subsection 29(6.1) of the Pension Benefits Standards Act, 1985 either in a lump sum payment or over a maximum period of five years. The option to pay this amount over a five year period is not available if the employer is being liquidated or is in bankruptcy. The termination report must clearly disclose how the employer will be funding the deficit.

If a plan terminates with a deficit on termination and the employer decides to pay it over a period of up to five years rather than to pay it immediately, the administrator must, in addition to filing the termination report as at the date of termination, file the following documents with OSFI:

1. An annual Actuarial Report as at the termination date anniversary. The last report filed will show the final year’s schedule of payments.
2. An Annual Information Return (OSFI-49), Certified Financial Statement (OSFI-60) and an Auditor’s Report (if required) filed annually. These documents are to be completed as at the plan year end until the year end before all plan assets have been distributed.
3. An annual plan assessment within 6 months after the end of each plan year until all plan assets have been distributed.
4. An annual Solvency Information Return (OSFI 575) until the year end before all plan assets have been distributed, due 45 days after the plan year end.