Saskatchewan’s pension regulator has set out proposals that include eliminating solvency funding for the province’s negotiated cost pension plans.
Currently, all negotiated cost plans must fund on both a going-concern and a solvency basis.
The proposal is part of a consultation paper published by the Financial and Consumers Affairs Authority. It applies only to negotiated cost arrangements, which are “plans where the funding obligations are limited by collective bargaining agreement or contract and where benefits can be reduced if there is a funding deficit,” according to the consultation paper.
Currently, there are six negotiated cost plans in the province, all of which are multi-employer plans:
- Saskatchewan piping industry pension plan;
- Carpenters’ pension fund of Saskatchewan;
- International Brotherhood of Electrical Workers Local Union 2038 pension trust fund;
- Saskatchewan retail, wholesale and department store union pension plan;
- Teamsters/RWDSU general pension plan; and
- International Union of Operating Engineers Local 870 pension plan.
Read: Five provinces enter into multi-jurisdictional pension agreement
Saskatchewan is following in the footsteps of two other provinces looking at solvency funding regulations this year. In a consultation paper published on July 26, Ontario proposed enhancing the existing going-concern funding requirements while eliminating solvency funding. On Jan. 1, Quebec became the first province to move to going-concern funding by removing the requirement to fund private defined benefit pension plans on a solvency basis.
In its response to Saskatchewan’s pension regulator, the Association of Canadian Pension Management said it agrees with the proposals in general but expressed concern about the suggested timeline of transitioning over one actuarial valuation report period.
Read: Quebec shakes up pension landscape with shift to going-concern funding
The other proposals put forward in the consultation include:
- Requirements respecting provisions for adverse deviation;
- Enhanced member communications; and
- Restrictions on benefit improvements.
In response to the consultation’s question about whether a similar framework should be available to other types of pension plans in the province, the ACPM had a mixed response. “The proposed regime should only be available to target benefit plans and NCPPs, although the [proposed] option might be considered for all defined benefit plans,” it wrote.
“Having the same basis to determine the lump sum to transfer from a defined benefit provision would reduce complexity and mitigate communication issues that could occur with multiple basis for lump sum determination.”
Read: Eliminating solvency funding on the table as Ontario reviews DB rules