News Release - May 26, 2009
GOVERNMENT OFFERS TEMPORARY SOLVENCY DEFICIENCY PAYMENT RELIEF TO PENSION PLANS
The Saskatchewan government today announced plans to temporarily suspend the requirement for sponsors of defined benefit pension plans to make up the significant shortfall in these plans, resulting from poor investment returns.
Regulations currently in place require that contributions to defined benefit pension plans be increased significantly to compensate for the losses. To help these plans cope with the unprecedented decline in capital markets seen in 2008, the provincial government will give defined benefit pension plans the option of a three-year moratorium on making up the shortfall.
"At the end of 2007, Saskatchewan's defined benefit plans were, overall, in good shape," Minister responsible for the Saskatchewan Financial Services Commission Don Morgan said. "However, the global economic downturn in 2008 means plans are now facing very large shortfalls. This government wants to give these plans some breathing room while the investment markets recover."
A defined benefit plan is one in which a retired employee receives a specific pension amount based on salary history and years of service. There are 62 such plans registered in Saskatchewan, representing more than 120,000 active and retired plan members in both the public and private sectors.
Most Canadian provinces have announced temporary solvency relief for defined benefit plans.
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