Canadian Investment Review

Ontario could scrap solvency-funding requirement

Written by Glenn Kauth on Wednesday, July 27th, 2016 at 3:03 pm

ontario flagEliminating the solvency-funding requirement is among the possibilities as the Ontario government launches consultations on revamping the funding rules for the province’s defined benefit pension plans.

In a consultation paper released yesterday, the Ministry of Finance laid out the many options on the table as the government considers what to do about the concerns raised about the viability of its solvency-funding rules. “Despite the various modifications made to Ontario’s solvency funding rules over the years, many plan sponsors have found solvency funding requirements particularly onerous since the 2008 economic downturn, compared to previous periods when equity returns were stronger and long term interest rates were higher,” the consultation paper states.

One of the options under consideration is enhancing the existing going-concern funding requirements while eliminating solvency funding. The government is also considering maintaining the solvency-funding framework while modifying the requirements.

The potential changes to the going-concern requirements include:


The government is also considering keeping a modified solvency-funding requirement. The potential modifications include:

David Marshall, former president and chief executive officer of the Workplace Safety and Insurance Board, is leading the solvency review. The government is accepting feedback on the issue at until Sept. 30, 2016.

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