The Government of Alberta has amended the Employment Pension Plans Regulation to allow letters of credit as an option for solvency funding in pension plans.
Employees’ benefits will not be affected by this change and employers will have improved flexibility for administering pension plans.
The concept of using letters of credit was proposed in an Alberta Finance discussion paper in 2005 and received very positive feedback. This process has already been introduced for federally regulated defined benefit pension plans and for defined benefit pension plans registered in Quebec. It is also part of the Canadian Institute of Actuaries 10-point strategy for pension plans in Canada. Several other provinces are considering similar changes to their legislation.
Other amendments to the Employment Pension Plans Regulation include: permitting surviving pension partners(married or common-law spouses)and ex-spouses who are under age 50 to transfer to a Life Income Fund(LIF)and removing the requirement for administrators of defined contribution plans to provide annuity price quotes to terminating plan members.
To view the legislation on the Government of Alberta’s website, click here.
To comment on this story, email craig.sebastiano@rci.rogers.com.