May 2012

May 2012

Pensions – Consultation: Immediate Vesting

May 28, 2012 - The Government of Saskatchewan is interested in amending The Pension Benefits Act, 1992 (the Act) to require immediate vesting of all pension benefits.  Saskatchewan Financial Services Commission (SFSC) is interested in receiving your comments on this proposed amendment.

Immediate vesting will enhance plan member benefit entitlements.  The pension standards law in most other provinces, as well as federal pension benefits law, requires (or soon will require) immediate vesting. The amendment which is being proposed modernizes Saskatchewan’s pension standards law.

Pension plan contracts which do not already provide for immediate vesting will have to be amended.  Pension plan contracts may also have to be amended to provide for immediate lock-in.  Once pension benefits are vested, they become locked-in.  
The exceptions to the locking-in rules under the Act will not be changing.  For example, the Act will still allow a plan to pay a pension entitlement in cash to a terminating member if the commuted value of the benefit is less than 20% of the YMPE, assuming this provision is included in the pension plan contract.

We will keep you informed about any deadlines by which pension plan contracts would have to be amended.  The deadline would not be before spring 2013.  

If you have any feedback on this proposal, we are interested in hearing from you by June 7, 2012.   Please send your comments to tami.dove@gov.sk.ca.  Your comments may be disclosed to others who have provided feedback, or any other interested parties, during and after the consultation process.  Your comments may be posted on SFSC’s website.  Your personal information will not be disclosed without your express written consent; however, the identity of an organization may be made public in connection with its submission or comments.  The Freedom of Information and Protection of Privacy Act of Saskatchewan will apply to any submission received by our office.
 

Pensions – Consultation: Terminal Funding
May 28, 2012 - The Government of Saskatchewan is interested in amending The Pension Benefits Act, 1992 (the Act) and associated regulations to require that an employer fully fund a solvency deficiency when a plan is terminated.  Saskatchewan Financial Services Commission (SFSC) is interested in receiving your comments on the proposed amendments.

This funding requirement would increase benefit security to plan members and retirees.  The pension standards law in all other provinces, as well as the federal pension benefits law, requires the employer to fully fund a deficiency on plan wind up.  The amendment which is being proposed modernizes Saskatchewan’s pension standards law.

It is proposed that the rules will work in the following manner:

1. The deficiency will be amortized in equal monthly payments over not more than 5 years from the date of the plan termination. 
2. The rules would apply to all defined benefit plans with the exception of plans where the employer’s liability with respect to the funding of the plan is limited pursuant to a collective bargaining agreement or other contract.
3. If a plan contains a provision that requires members to make payments into the plan with respect to a solvency deficiency, then the member’s portion of that deficiency does not need to be funded.
4. The amount of the deficiency is established at the plan termination date, and no further valuations are required.
5. Plan member settlement options are set as at the plan termination date. 
6. At the time of plan termination, an initial distribution will be made to plan beneficiaries based on the solvency ratio of the plan.  Annuities will be purchased outside of the pension plan fund, unless the Superintendent approves payment of annuities from the fund.  Annuitants will initially receive a replacement of their monthly annuity amount multiplied by the solvency ratio of the plan.  However, in limited circumstances, annuitants could receive an amount higher than this. 
7. Once the deficiency is amortized, the final asset distribution will be made.  Those who transferred a commuted value out of the plan will receive the remainder of the commuted value, plus interest.  Those who are in receipt of annuities will receive another annuity.  The combination of the initial annuity and the annuity at final distribution will total 100% of the annuity received before plan termination, with an adjustment for interest.    

If you have any feedback on this proposal, we are interested in hearing from you by June 7, 2012.   Please send your comments to leah.fichter@gov.sk.ca.  Your comments may be disclosed to others who have provided feedback, or any other interested parties, during and after the consultation process.  Your comments may be posted on SFSC’s website.  Your personal information will not be disclosed without your express written consent; however, the identity of an organization may be made public in connection with its submission or comments.  The Freedom of Information and Protection of Privacy Act of Saskatchewan will apply to any submission received by our office.        

    
Pensions – Consultation Responses: New Funding Regime for Public Plans

May 16, 2012 - The Saskatchewan Financial Services Commission released a discussion paper on January 26, 2012 regarding the funding of public sector defined benefit pension plans. The consultation period has now closed and responses were received from various stakeholders.  The consultation responses can be found as an attachment below.

For more information, please contact:

Leah Fichter, Director, Pensions
Pensions Division
Saskatchewan Financial Services Commission
Suite 601, 1919 Saskatchewan Drive
Regina, Saskatchewan S4P 4H2
Phone:  (306) 787-7660
Fax:  (306) 798-4425
Email:  leah.fichter@gov.sk.ca

• Consultation responses - New Funding Regime for Public Plans