October 13, 2020
OSFI Update- Commuted Values
As we previously reported, OSFI has been taking steps to mitigate the effects of the COVID-19 situation on pension plans, which have included a temporary portability freeze on transfers from federally regulated Private Pension Plans. The NAV Canada Pension Plan is a federally regulated plan and therefore was subject to these restrictions.
We have been monitoring this situation and have provided updates as they became available. All previous B&F updates can be found here (April 7, May 29 and June 25).
On August 31st, OFSI officially lifted the portability freeze. The Superintendent of OSFI is no longer of the opinion that all portability transfers or annuity purchases will impair the solvency of the pension fund and has determined it is prudent to lift the portability freeze, subject to some conditions. OSFI has determined that these conditions are sufficient to protect the rights and interests of plan members and beneficiaries at this time. In addition, OSFI has introduced conditions designed to mitigate the risk that such transfers and purchases could disadvantage remaining plan members, while at the same time allowing eligible members access to a Commuted Value of their pension entitlements.
The latest changes and conditions for portability transfers and how it affects NCPP members are as follows:
- 90% of a member’s Commuted Value (the current funded status of NCPP) will be paid out immediately with the remaining 10% paid out (with interest) within 5 years of termination, or when the plan is 100% funded, whichever comes first.
- No longer a $35 million cap on aggregate transfers.
- Smaller CV amounts can continue to be paid in full.
We believe OSFI has found the right balance during these unprecedented times. We will continue to update you as new information becomes available.
On Behalf of the Executive Board;
Doug Best Scott Loder
President Executive Vice President
Click here for the PDF.