Canadian Institute of Actuaries updates pension commuted value standards
An in-depth look at this and other subjects are covered in the current issue of the Morneau Shepell News & Views
TORONTO, Feb. 27, 2020 /CNW/ - Morneau Shepell released the February 2020 issue of its monthly newsletter, News & Views, in which the company looks at the following topics:
- Canadian Institute of Actuaries finalizes new commuted value standards – The Actuarial Standards Board of the Canadian Institute of Actuaries has updated its pension commuted value standards. The new commuted value standards are expected to reduce slightly the commuted values of defined benefit pension entitlements, while increasing the complexity of commuted value calculations. The revised standards also include new rules for calculating commuted values in target pension arrangements.
- Ontario amends pension regulation – Under a new amendment to Ontario Regulation 909, the threshold for determining whether Ontario-registered pension plans are required to file audited financial statements was increased from $3 million to $10 million in assets. The regulation also provides that updates to the commuted value standards by the Canadian Institute of Actuaries will be adopted automatically.
- Court agrees to compensate retiree for negligent misrepresentation of benefits – In Calder v. Alberta, the court found that the administrator of a public sector pension plan had negligently misrepresented a member's benefits. The member relied on an erroneous plan text interpretation by the plan administrator that was later revised in a way that considerably reduced his pension. While the court declined to restore the previous interpretation of the member's benefit, it found that the member would have deferred his retirement had he known true value of his pension. The court awarded the member a lump sum payment designed to put him in the same position he would have been in had he deferred his retirement for three years. The decision was upheld by the Alberta Court of Appeal.
- Ontario proposes exemptions for individual and designated pension plans – Ontario released proposed amendments to the Pension Benefits Act that would exempt certain individual pension plans and designated plans from the legislation. The proposed exemption would apply to plans whose members and beneficiaries are all considered "connected" within the meaning of income tax rules.
- Tracking the funded status of pension plans as at January 31, 2020 – Morneau Shepell describes the funded status of pension plans since December 31, 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 2019. 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 January 31, 2020 – 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 16 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 - Corporate