S-2.1.1 - Act to foster the financial health and sustainability of municipal defined benefit pension plans

Section 16 Disposition versions

2014-12-05

16. The automatic indexation of the pension of members who are retired on 31 December 2013 may be suspended in whole or in part by the municipal body from 1 January 2017 if it is shown in an actuarial valuation established on the basis of the data as at 31 December 2015 that the pension plan is not fully funded. In such a case, the retired members and the municipal body assume the deficiencies attributable to the retired members in equal parts, except if the municipal body decides to assume a greater portion, up to 55%. If the value of the suspension is greater than the portion of the deficiencies that must be assumed by the retired members, the balance continues to be paid to the retired members in the form of a partial automatic indexation.

If the deficiencies identified in the actuarial valuation established on the basis of the data as at 31 December 2015 are greater than those identified in the actuarial valuation established on the basis of the data as at 31 December 2013, the value of the indexation suspension is based on the latter valuation.

If the automatic indexation of retired members’ pensions has been suspended and the surplus assets with respect to service prior to 1 January 2014, defined in the second paragraph of section 19, are identified in an actuarial valuation subsequent to that established on the basis of the data as at 31 December 2015, the pension of the retired members is increased in the year following that actuarial valuation, on the indexation date specified in the pension plan. The increased pension is equal to the pension that would have been paid under the plan had there not been an indexation suspension since the preceding actuarial valuation. If the surplus assets are insufficient to cover the whole increase, the adjustment is to be made on the basis of the surplus available to finance the increase.

If any surplus assets remain after the application of the third paragraph, the pension is to be indexed annually, in whole or in part, using the formula in the pension plan on 31 December 2013, until the next complete actuarial valuation, taking into account any partial automatic indexation. At no time may the pension be greater than the pension that would have been paid under the plan if the indexation had not been suspended under this Act.

The indexations under the third and fourth paragraphs must be established at each actuarial valuation subsequent to that established on the basis of the data as at 31 December 2015 if surplus assets defined in the second paragraph of section 19 are identified.

The portion of the deficiencies attributable to the municipal body must be reimbursed over a 15-year period and the deficiencies cannot be consolidated.

Any new deficiency attributable to members who are retired on 31 December 2013, identified in an actuarial valuation subsequent to 31 December 2015, is borne by the municipal body.

2014, c. 15, s. 16.