TORONTO -- Ottawa has updated regulations that govern Canada's private pension plans, Finance Minister Jim Flaherty announced Friday.
Based on draft regulations tabled in May, the changes include using average -- rather than current -- solvency ratios to determine minimum funding requirements, limiting contribution holidays and lifting restrictions on the amount pension plans can invest in resource and real property investments.
"These amendments reflect financial market volatility in recent years, which points to the need to enhance protection for plan members," Flaherty said in a release.
Averaging solvency ratios should help soften the impact of short-term market fluctuations on a plan's solvency funding requirements, the government said.
Limiting contribution holidays will enhance benefit security by maintaining a cushion of pension plan assets and more investment choice will foster more prudent, diversified fund portfolios.
"The changes also modernize the rules for pension fund investments and give plan sponsors greater flexibility in terms of investment allocation to allow them to better manage their funding obligations."
Additional changes to the legislative and regulatory pension framework are expected in the coming months.
