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Pension plan assets and liabilities

The actuarial valuation report must present the assets and liabilities of a pension plan on a going concern basis and on a solvency basis.

Since 1 January 2016, the plan assets and liabilities determined using the above two approaches have excluded:

The assets and liabilities fall under the plan's defined benefit component.

Important

In the case of a floor plan, the assets and liabilities must include the defined contribution component.


On a going concern basis:

  • Assets exclude the value of guaranteed annuities.
  • Assets must include the value of irrevocable standby letters of credit that do not exceed 15% of the liabilities on a going concern basis.
  • If the actuary considers that a smoothed value better represents the value of the plan's assets for an on-going plan, plan assets cannot be established using their market value. The period during which the market value is smoothed cannot exceed 5 years.
  • Liabilities exclude the value of guaranteed annuities.

On a solvency basis:

  • Assets include the value of guaranteed annuities.
  • Assets must include the value of irrevocable standby letters of credit that do not exceed 15% of the liabilities on a solvency basis.
  • Assets must be established in accordance with their liquidation value, minus the estimated amount of the administration costs to be paid out of the pension fund in the event of plan termination.
  • Liabilities include the value of guaranteed annuities.

Letters of credit

Plan assets on a going concern basis and on a solvency basis must include the value of irrevocable standby letters of credit that meet the following conditions:

  • The letters were provided to the administrator in accordance with the Supplemental Pension Plans Act (the SPP Act).
  • They were provided on or before the actuarial valuation date.
  • They are in effect for the fiscal year following that date.

Legal references

  • Sections 42.1, 122.1, 122.2, 127, 141 and 142.2 of the SPP Act Cet hyperlien s'ouvrira dans une nouvelle fenêtre.
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