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Normandin Beaudry

Draft Regulation Extending Relief Measures to 2014 and 2015 – Private Sector

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There, in black and white

NB Bulletin Vol 16 N. 12, July 2013

On July 10, 2013, the Quebec government published a draft regulation to extend until December 31, 2015, relief measures applicable to private sector1 defined benefit pension plans. These measures will provide answers to sponsors’ questions concerning funding contributions required for 2014 and 2015.

The relief measures announced are very similar to those introduced in 2009 and renewed in 2011. They apply for solvency valuation purposes. Plan sponsors will be able to choose any combination of the following measures: 

  • Asset smoothing: gains and losses recognized gradually over a period not exceeding five years
  • Deficiency consolidation: existing amortization payments eliminated by combining their unamortized balance with the new solvency deficiency 
  • Consolidated deficiencies and all subsequent technical actuarial deficiencies amortized over a period of 10 years

If asset smoothing was used during the previous valuation, this same smoothing method must be used once again.

Deficiency consolidation applies only for the first actuarial valuation after December 30, 2013.

If the proposed measures are enacted, it would be in a pension committee’s best interest to validate the employer’s intention regarding the use of relief measures for 2014 and 2015.  The pension committee should also notify the plan actuary as soon as possible to ensure that the actuarial valuation report reflects the employer’s decision. 


1 For information on the relief measures that apply to municipal and university pension plans, please refer to our Municipal Radar for July 2013, « Projets de règlements prolongeant la mesure d’allègement pour 2014 et 2015 - Secteurs municipal et universitaire » (this publication is available in French only).

 

Please feel free to contact us for additional information.

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