Federally regulated pension plan sponsors are getting a holiday from the obligation to make payments to address funding deficiencies for the rest of the year.
The federal Department of Finance announced rules providing a moratorium on so-called “solvency special payments” by federally regulated defined benefit plans until Dec. 31.
“This relief will help ensure that employers have the financial resources they need to maintain their operations and their pension plans, and to protect the retirement security of their workers and retirees,” it said.
Under federal pension legislation, plans with funding shortfalls are typically required to make special payments to eliminate their deficits over five years.
However, the government is temporarily suspending the requirement as part of its efforts to address the effects of Covid-19, noting that some plan sponsors are “facing significant financial constraints” due to the pandemic’s impact on the economy.
“A secure and dignified retirement for Canadians after a lifetime of hard work has always been a priority for the government, and even more so during this challenging period,” said Finance Minister Bill Morneau, in a statement.
“These new regulations will provide temporary relief to federally regulated pension plan sponsors, which will help to support plan sponsors so that they are able to continue to protect the retirement security of workers and retirees.”