Nova Scotia 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, June 27, 2019 /CNW/ - Morneau Shepell has released the June 2019 issue of its monthly newsletter, News & Views, in which the company looks at the following topics:
- Nova Scotia releases new defined benefit funding rules – The Nova Scotia government recently detailed new proposed rules on funding for defined benefit (DB) pension plans. The proposed funding framework will permit DB plans to fund on a reduced solvency basis of 85 per cent on a go-forward basis. It will also require funding on an enhanced going concern basis by specifying a 10-year going concern amortization period and require funding of a provision for adverse deviation (PfAD), among other changes.
- Ontario government makes changes to funding regulation – On May 21, 2019, the government of Ontario filed a regulation making clarifications, corrections and adjustments to the new funding framework for DB plans that took effect on May 1, 2018. The regulation affects the use of excess contributions, the availability of contribution holidays, the definition of "closed plan" for PfAD calculations, the PfAD calculation formula, and more.
- Revised guideline issued on electronic communications – The Canadian Association of Pension Supervisory Authorities released the revised Guideline No. 2 – Electronic Communications in the Pension Industry Guideline on May 8, 2019, replacing the 2002 version of the Guideline. Guideline No. 2 provides a set of principle-based industry standards and best practices for pension plan administrators to adopt as part of their electronic communications framework, in conjunction with legislative requirements.
- Quebec amends Pay Equity Act – On April 10, 2019, the Quebec National Assembly assented to Bill 10, An Act to amend the Pay Equity Act to improve the pay equity audit process, which amends the Pay Equity Act by giving employees the opportunity to participate in the pay equity audit process and ensure that pay equity adjustments become payable on the date of the organizational change or event leading to the adjustment.
- Tracking the funded status of pension plans as at May 31, 2019 – Morneau Shepell describes the funded status of pension plans over the first five 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 May 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 26 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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Morneau Shepell is the leading provider of technology-enabled HR services that deliver an integrated approach to well-being through our cloud-based platform. Our focus is providing everything our clients need to support the mental, physical, social and financial well-being of their people. By improving lives, we improve business. Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement and benefits consulting, actuarial and investment services. Morneau Shepell employs almost 5,000 employees who work with some 24,000 client organizations that use our services in 162 countries. Morneau Shepell is a publicly traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell Inc.