Pension Changes to Control Contribution Growth
Changes to solvency requirements under the Pension Benefits Act will help municipalities and their employees control growth of contribution requirements.
"In some cases, municipalities and employees were facing significant contribution increases," said Environment and Labour Minister Mark Parent. "I believe these changes will maintain a high level of protection of pension plan benefits while enhancing affordability."
Previously, solvency deficiencies in these plans had to be fully funded within five years. Under the rule change, the plans will have five years to achieve 85 per cent solvency.
Solvency is a measure of a plan's abilities to meet its financial obligations to its members.
The rule change will be in effect for 10 years, beginning Aug. 30, 2006.
During this time, municipalities would be fully responsible for any funding shortfalls should a pension plan be totally, or partially, wound up.
"This will protect the interest of plan members, which is paramount," Mr. Parent said.
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Rule changes for municipal pensions will help employers and employees control the growth of their contributions.
Environmental and Labour Minister Mark Parent says the changes will protect pension members while ensuring their plans are affordable.
The rule change will be in force for 10 years. Municipalities will be fully responsible for any shortfalls should a pension plan wind up during that period.