Solvency Funding for Multi-Employer Pension Plans (MEPPs)

July 24, 2000

To all plan administrators, trustees of pension funds and pension stakeholders:

The Financial Services Commission of Ontario (FSCO) has recently become aware of public statements that the Pension Benefits Act, R.S.O. 1990, c. P.8 does not require solvency funding for multi-employer pension plans (MEPPs).

This statement is not accurate. Subsection 6(4) of Regulation 909, R.R.O. 1990 (the "Regulation") requires that a report filed for a MEPP include a demonstration by the actuary that the contributions required by the collective agreements are sufficient to provide the benefits set out in the plan, without considering any provision for reduction of benefits. It has always been, and continues to be our view that the demonstration required by subsection 6(4), when combined with the requirements for reports in sections 13 and 14 of the Regulation, must be on both a going concern and a solvency basis. Where sufficiency of contributions is not demonstrated, the actuary is required to identify options available to the plan administrator that will result in sufficient contributions being made to the plan. The administrator is then required by subsection 6(5) of the Regulation to inform the Superintendent of the action taken that will result in the plan meeting the funding requirements.

I trust this letter clarifies FSCO's position with regard to solvency funding for MEPPs.

Yours truly,

Dina Palozzi Chief Executive Officer and Superintendent of Financial Services