Update on solvency funding framework in Ontario and elimination of disparity clauses in Quebec
An in-depth look at these and other subjects are covered in the current issue of the Morneau Shepell News & Views
TORONTO, Dec. 14, 2017 /CNW/ - Morneau Shepell released the December 2017 issue of its monthly newsletter, News & Views, in which the Company looked at a number of topics including: an update on the new solvency funding framework in Ontario; the possible elimination of disparity clauses in pension, group insurance and employee benefit plans in Quebec; the requirements of voluntary retirement savings plans in Quebec; and a new commuted value payout option in Alberta.
- New solvency funding framework in Ontario – The Ontario government has suggested several changes to the Ontario Pension Benefits Act through Bill 177, including technical amendments that will help implement the proposed solvency funding framework and a requirement that the Financial Services Commission of Ontario operates an electronic registry for missing pension plan beneficiaries.
- Disparity clauses in Quebec – A working group within the Quebec government has recommended the elimination of "orphan clauses" in pension, group insurance and other employee benefit plans, which currently create disparities based on the date of hire. The group has proposed closing these inequalities so that the same plans, or equivalent plans, are offered to everyone.
- Voluntary retirement savings plan (VRSP) in Quebec – Employers in Quebec who have 10 to 19 employees are now required to set up a VRSP or an equivalent group retirement savings plan by December 31, 2017. As of January 1, 2018, the default VRSP contribution rate will increase from two per cent to three per cent of gross salary, applicable to all those who have not determined their contribution rate by the deadline.
- Commuted value payments in Alberta – The Alberta government has amended the Employment Pension Plans Regulation, establishing a new commuted value payout option for collectively bargained multi-employer plans (CBMEPs) that are under a solvency moratorium. CBMEPs now have the option to calculate and pay commuted values on a going concern basis.
- Tracking the funded status of pension plans as at November 30, 2017 – Morneau Shepell shared the changes in the financial position of a typical defined benefit pension plan since December 31, 2016. The graph in the newsletter shows the impact of three typical portfolios on plan assets and the effect of interest rate changes on solvency liabilities of medium duration.
- Impact on pension expense under international accounting as at November 30, 2017 – Morneau Shepell showed the expense impact for a typical pension plan that starts the year at an arbitrary value of 100 (expense index). Since the beginning of the year, the pension expense has increased by 19 per cent (for a contributory plan) due to the decrease in the discount rates.
About Morneau Shepell
Morneau Shepell is the only human resources consulting and technology company that takes an integrated approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. As a leader in strategic HR consulting and innovative pension design, the Company helps clients solve complex workforce problems and provides integrated productivity, health and retirement solutions. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations. With more than 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell Inc.