The Alberta Treasury and Finance Board issued EPPA Update 12-01 “Defined Benefit Funding Relief Provisions”.    The amendment is meant to introduce short term funding relief provisions to assist plan sponsors with the financial pressures associated with funding a defined benefit pension plan.  It is important to note that this relief option is only applicable to pension plans which are not specified multi-employer pension plans (SMEPPs).

The amendment permits plan administrators, on written application to the Superintendent of Pensions, to consolidate all existing pension plan solvency deficiencies into one new solvency deficiency. The regulation amendment then further allows for that solvency deficiency to be amortized over a period not exceeding a maximum of 10 years (rather than the usual 5 year amortization).

Plan administrators are permitted to make only one application for the consolidation of solvency deficiencies and extension of the amortization period. The application may be made in respect of any actuarial valuation report that has a review date between December 31, 2011 and December 31, 2012, inclusive.  To view the full EPPA Update click here

The amendment no doubt comes as welcome news to plan sponsors who continue to battle an investment environment of low interest rates and volatile investment returns which affects the overall funding ratios for a vast majority of defined benefit plan sponsors.