New funding rules applicable to pension plans of the municipal and university sectors adoptedLinkedIn
There, in black and white
NB Bulletin Vol. 13 N. 8, July 2010
The anticipated final version of the Regulation respecting the funding of pension plans of the municipal and university sectors was published in the July 7, 2010 edition of the Gazette officielle du Québec.
Although this final version includes certain modifications to the proposed regulation, the principles and substance of the regulation remain unaltered. We invite you to read our January 2010 bulletin (Vol. 13, No. 1, January 2010 "Proposed Regulation") outlining the proposed regulation.
Below is a summary of the modifications made to the proposed regulation:
- No reserve will be established before December 31, 2012. Thus, actuarial gains revealed before this date will not be transferred from the general account to the reserve.
- The provision for adverse deviations (PAD) is set at zero until December 30, 2012. It will therefore be calculated for the first time during the first actuarial valuation prepared after this date. This delay will allow pension committees to implement measures related to the new funding rules.
- Actuarial gains from contributions exceeding those minimally required will not increase the reserve.
- The reserve can be used to fund up to 50% of amortization payments related to a technical deficit, whether this contribution is funded by the employer or the employees.
- Surplus assets on a going concern basis that can be used to fund a plan improvement or to grant a contribution holiday will correspond to the excess of the general account over the liability.
- Transitional provisions outlining specific rules pertaining to the consolidation of certain deficits created before December 31, 2008 for municipal sector plans are simplified.
- The deadline for submitting to the Régie des rentes du Québec an actuarial valuation report prepared between December 30, 2008 and November 30, 2009 is extended to August 31, 2010. The September 30, 2010 deadline continues to apply for actuarial valuations as at December 31, 2009.
Finally, following certain clarifications made by the Act to amend various legislative provisions respecting municipal affairs which was adopted on July 10, 2010, we are expecting a new regulatory amendment clarifying the redemption procedure for redeemable bonds issued pursuant to the adoption of Bill 54.
Please feel free to contact us for additional information.
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