A bill currently under consideration by Canada’s senate could hasten the closure of open defined benefit plans, according to Gavin Benjamin, a partner in LifeWorks Inc.’s pension and benefits solutions business.

“In our view, this is a potential outcome, particularly with respect to companies for whom the ability to borrow is affected by the bill,” he wrote in an email to the Canadian Investment Review expanding on his concerns around Bill C-228. “Whether it has to lead to the closure of DB plans is another story, but we would certainly expect to see more attention on risk management and governance, which may accelerate some decisions.”

The bill, which is likely to be passed by the Canadian senate this month, would give super-priority to DB plan members during windups or plan sponsor bankruptcies. In a report released last week, Benjamin said the bill could raise borrowing costs for some companies that sponsor DB pension plans.

Read: Super-priority bill a major concern for DB plan sponsors: report

In the initial report, he noted the bill could have an impact on borrowing costs for plans with larger allocations to equities and other risky assets and large deficits compared to the sponsoring organization’s overall size.

However, in the followup email, he said the precise effect on borrowing isn’t known, but that it may vary significantly between financial institutions and pension plan sponsors. “However, we expect that the significance of the effect will depend on factors such as the financial health of both the pension plan and plan sponsor, as well as prevailing economic and financial market conditions.”

The effect of the bill may be felt throughout the entire DB universe, he added. “While historically strong solvency ratios will likely be helpful, lenders may still factor in the risk that the solvency ratio could deteriorate in the future, particularly if the plan has a significant allocation to risky assets or there are sub-optimal governance procedures and policies in place that may lessen the ability to take well-timed, informed actions as circumstances evolve.”

While it remains unclear whether the bill will be the deciding factor in whether existing DB plans are closed, Benjamin said it will push pension plan sponsors to accelerate de-risking strategies. He expects to see more plan sponsors purchase annuities and to consider funding plans above the minimum solvency funding levels required by legislation.

Read: ACPM warns of ‘unintended consequences’ of pension super-priority bill