Allow pension plan sponsors to opt out of special payments in short term, urges PIAC

The Pension Investment Association of Canada is calling on provincial governments to allow pension plan sponsors to opt out of making any special payments for a period of six to 12 months or until there’s greater visibility of the end of the fallout from the coronavirus crisis.

“We recommend that no conditionality or approval requirements be applied to such relief, other than a requirement by companies to inform regulators of their funding plans,” read a letter from the PIAC.

Read: Ontario temporarily slashes penalties for PBGF non-payment

The letter also noted the PIAC supports the actions of some jurisdictions to temporarily freeze commuted-value transfers and/or annuity buyouts without regulatory approval, but only for the short term. “PIAC can support such restrictions on a short-term basis (i.e., six months), but does not think they will be practical to maintain as regulators may well face a scenario in coming quarters where plan sponsors need to downsize and are at the same time managing under-funded plans and operating cash-flow shortfalls.”

During these turbulent times, regulators should work to help those plans that can continue to pay commuted-value transfers, it said. Over the medium term, the PIAC recommended that provincial finance ministers maintain flexibility in adapting pension funding requirements and keep an open dialogue going with plan sponsors. “We would moreover encourage provinces that have not yet implemented fundamental pension funding reform to do so.”

The PIAC also noted its support for efforts to provide plan sponsors with administrative relief by extending deadlines for annual statements for members and beneficiaries, annual actuarial valuations, plan amendments, annual information returns and other regulatory filings.

Read: An overview of Canadian DB pension relief measures during coronavirus