Feb. 21, 2017
The landmark shift last year by Québec to going-concern funding obligations for defined benefit pension plans is benefiting employers, according to an article in Benefits Canada. In his article, author Julius Melnitzer examines how the changes brought about by the new legislation that came into effect January 1, 2016 were meant to “reduce the volatility of employer contributions to defined benefit plans.” Julien Ranger, a partner in Osler’s Pensions & Benefits Practice Group, says so far the results have been positive for employers.
“So far, the objective of reducing volatility in employer contributions appears to have been met,” Julien tells Benefits Canada. “Hopefully, that will be a factor that will allow employers to at least maintain DB plans, if not create new ones.”
But Julien also says that solvency valuations will still be required for employers.
“Employers are still required to do them and report the results,” says Ranger. “What’s changed is that they don’t have to put money in the plan based on that calculation.”
As to whether these changes in Québec will eventually be adopted on a national scale, that has yet to be determined, according to Julien.
“Elsewhere in Canada, there seems to be a wait-and-see approach,” says Ranger. “But I believe that everyone is at least looking at the Québec experiment.”
For more information, read Julius Melnitzer’s article “A look at Québec’s pension solvency changes one year on” in Benefits Canada.