British Columbia proposes new funding framework for defined benefit pension plans
An in-depth look at this and other subjects in the current issue of the Morneau Shepell News & Views
TORONTO, Sept. 25, 2019 /CNW/ - Morneau Shepell has released the September 2019 issue of its monthly newsletter, News & Views, in which the company looks at the following topics:
- Update on changes to pharmaceutical benefit coverage – In 2019, there have been several new federal and provincial developments on the management of drug prices and the cost of public drug plans. Some of these changes include revised federal drug pricing regulations that are expected to lower the costs of new patented drugs, coming into effect on July 1, 2020; the introduction of a first-of-its-kind biosimilar transition program in British Columbia through the province's PharmaCare program; and the Advisory Council on the Implementation of National Pharmacare releasing its final report in June 2019, calling for a universal single-payer drug plan for all Canadians phased in between 2022 and 2027.
- British Columbia proposes reform to pension funding – In August 2019, the British Columbia Ministry of Finance released a report proposing changes to minimum funding requirements for B.C.-registered defined benefit (DB) pension plans. Under the new framework, DB pension plans would be funded on both a going-concern and solvency basis. The report proposes that changes to funding rules could be effective for valuations filed with dates as early as December 31, 2019.
- Financial Services Regulatory Authority of Ontario to impose fines for late regulatory filings – The Financial Services Regulatory Authority of Ontario (FSRA) has announced that it intends to begin imposing summary administrative monetary penalties (AMPs) effective for filings due on or after September 30, 2019. FSRA will work with plan administrators who have outstanding late filings in order to bring plans into compliance. Those with outstanding late filings that are brought into compliance by October 31, 2019 will not be issued summary AMPs.
- FSRA creates delegated administrator role under Pension Services Portal – FSRA has created a new role of "delegated administrator" under the Pension Services Portal (PSP), which allows those in the role to make and revoke delegations for the employees within their organizations. The new role permits more than one employee of the pension plan administrator to manage delegations both within and outside of the organization. This change aims to reduce the burden on primary administrators that outsource the administration and investment functions of their pension plans to third parties.
- Tracking the funded status of pension plans as at August 31, 2019 – Morneau Shepell describes the funded status of pension plans over the first eight months of 2019 based on three typical investment portfolios. A graph shows the changes in the financial position of a typical defined benefit plan since the end of 2018. A table shows the impact of past returns on plan assets and the effect of interest rate changes on solvency liabilities of a medium duration pension plan.
- The impact of pension expense under international accounting as at August 31, 2019 – Morneau Shepell has shown the evolution of the pension expense for a typical defined benefit pension plan. Since the beginning of the year, the pension expense has increased by 37 per cent (for a contributory plan) due to the decrease in the discount rates, despite the good returns on assets (relative to the discount rate).
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SOURCE Morneau Shepell Inc.