Solvency Funding Relief for Federally Regulated Pension Plans Amidst the COVID-19 Pandemic

Written by Susan Seller, Jordan Fremont and Jaspreet Kaur

On April 15, 2020, the Finance Minister, Bill Morneau announced that the government will provide immediate, temporary relief to sponsors of federally regulated defined benefit (DB) pension plans. This relief will be in the form of a moratorium, through the remainder of 2020, on solvency payment requirements for federally regulated DB plans. 

This relief measure is intended to address the COVID-19 pandemic's effects on the economy. Some pension plan sponsors are facing significant financial constraints, causing short-term liquidity issues and, in some cases, threatening the long-term viability of their businesses. A moratorium on remaining 2020 solvency payment requirements for federally regulated DB pension plans could assist sponsoring employers with managing financial resources that are needed to maintain their operations and to ultimately protect the retirement security of their workers and retirees.

The federal government's announcement further provides that the impacts of the global pandemic on DB pension plan assets and liabilities could also significantly affect solvency funding obligations in 2021. The government intends to consult with stakeholders of federally regulated DB pension plans over the coming months on options to provide relief from 2021 funding obligations.

For a summary of COVID-19 related announcements and measures introduced by OSFI, please see OSFI Provides Further Guidance to Administrators of Federally Regulated Pension Plans Amidst the COVID-19 Pandemic.

For a summary of COVID-19 related announcements and measures introduced by pension regulators in:

• Ontario, New Brunswick and Québec;
• British Columbia; and
• Alberta, Saskatchewan and Nova Scotia.

We will continue to monitor and update you on related developments of interest to pension plan sponsors and administrators. If your business or organization has questions respecting the respect COVID-19 implications to your pension plan, please contact a member of the Bennett Jones Employment Services group. In addition, please visit our COVID-19 Resource Centre for other COVID-19-related materials.