The government of Newfoundland and Labrador has introduced an amendment to the Pension Benefits Act (PBA), requiring plan sponsors to fully fund any deficits on wind up.
Presently, the PBA requires a plan sponsor to contribute up to the date of wind up, after which any new deficits identified are not the responsibility of the sponsor. Should the assets of the pension fund be insufficient to pay all benefits, the pension and benefits are reduced.
Under the new legislation a plan sponsor that intends to wind up a pension plan will be required to fully fund the benefits provided under the plan. The timing of the full wind up funding is not specified in the amendment and is expected to be addressed in the future. The amendment does not impose any immediate funding increases on plan sponsors whose pension are continuing, and multi-employer plans are exempted.
The amendment will be applied to plan terminations which occur after April 1, 2008. It brings Newfoundland and Labrador in line with the wind up funding requirements of Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, and British Columbia.
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