National Pension Scheme (General) Amendment Regulations 2004

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National Pension Scheme (General) Amendment Regulations 2004
NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
REGULATIONS 2004

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BR 60/2004

NATIONAL PENSION SCHEME (OCCUPATIONAL PENSIONS)
ACT 1998

1998 : 36

NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
REGULATIONS 2004

The Minister of Finance, in exercise of the powers conferred by
section 69 of the National Pension Scheme (Occupational Pensions) Act
1998, makes the following Regulations:

Citation
1 These Regulations may be cited as the National Pension Scheme
(General) Amendment Regulations 2004.

Insertion of new Part VI

2 The National Pension Scheme (General) Regulations 1999 are
amended by inserting next after Part V the following new Part—

"PART VI
ACTUARIAL AND FUND MANAGEMENT

A - INTERPRETATION

Interpretation
39 (1) In this Part

NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
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"actuarial gain" means the sum, if positive, at the valuation date
of a going concern valuation, of

(a) the gain or loss to a pension plan during the period
since the immediately preceding report prepared in
accordance with regulation 50(1) or 51(1) of the increase
or decrease in the value of the assets of a pension plan,
less the liabilities of the plan during the period
determined in a going concern valuation of the plan
resulting from the difference between actual experience
and the experience expected by the actuarial
assumptions on which that valuation was based;

(b) the amount by which the going concern liabilities
increase or decrease as a result of an amendment to the
plan other than an amendment that provides benefits for
employment prior to the date of the amendment where
the employment had not previously been recognised for
purposes of the provision of pension benefits; and

(c) the amount by which the going concern liabilities
increase or decrease or the going concern assets
increase or decrease as a result of a change in actuarial
methods or assumptions upon which the current going
concern valuation is based;

"actuarial loss" means the sum, if negative, at the valuation date
of a going concern valuation, of

(a) the gain or loss to a pension plan during the period
since the immediately preceding report prepared in
accordance with regulation 50(1) or 51(1) of the increase
or decrease in the value of the assets of a pension plan
less the liabilities of the plan during the period
determined in a going concern valuation of the plan
resulting from the difference between actual experience
and the experience expected by the actuarial
assumptions on which that valuation was based;

(b) the amount by which the going concern liabilities
increase or decrease as a result of an amendment to the
plan other than an amendment that provides benefits for
employment prior to the date of the amendment where
the employment had not previously been recognised for
purposes of the provision of pension benefits; and

(c) the amount by which the going concern liabilities
increase or decrease or the going concern assets
increase or decrease as a result of a change in actuarial

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methods or assumptions upon which the current going
concern valuation is based;

"ancillary benefits" means the benefits referred to in section 29 of
the Act;

"annuity contract" means an annuity contract, issued by an
issuer registered under the Insurance Act 1978 or any other
person approved by the Commission, which is purchased in
discharge or in full settlement of a pension or benefit under a
registered pension plan;

"asset transfer ratio" means the ratio of

(a) the market value of investments held by the employer's
pension plan plus any cash balances and accrued or
receivable income items; to

(b) the sum of the transfer liabilities and the residual
liabilities;

"asset transfer value" means the transfer liabilities multiplied by
the lesser of

(a) the asset transfer ratio; and

(b) 1.00;

"book value", in relation to an asset, means the cost of
acquisition to the person acquiring the asset, including all
direct ancillary costs associated with the acquisition;

"carrying value" means a reasonable estimate of market value;

"effective date of transfer" means the effective date of the
amendment which gives rise to the transfer of assets and
liabilities from an exporting plan to an importing plan;

"escalated adjustment" means an adjustment that is made to a
pension or a deferred pension of a former member of a
pension plan where

(a) the adjustment is not capable of being determined with
certainty at the time the plan or a relevant amendment
to the plan is submitted for registration because the
adjustment is related to the investment earnings of the
pension fund or to future changes in a general wage or
price index; or

(b) the adjustment is an increase in the pension or deferred
pension at a fixed annual percentage rate specified in
the plan;

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"exporting plan" means each pension plan from which an asset
and liability transfer to an importing plan is proposed;

"going concern assets" means the value of the assets of a
pension plan including accrued and receivable income
determined on the basis of a going concern valuation;

"going concern liabilities" means the present value of the accrued
benefits of a defined benefit provision of a pension plan
determined on the basis of a going concern valuation;

"going concern unfunded liability" means the amount, if any, by
which the sum of the going concern liabilities exceeds the
going concern assets;

"going concern valuation" means a valuation of assets and
liabilities of a defined benefit provision of a pension plan
using methods and actuarial assumptions considered by the
actuary who valued the plan to be in accordance with the
Standards of Practice of the Canadian Institute of Actuaries,
or a corresponding British or American equivalent that may
be approved by the commission, for the valuation of a
continuing pension plan;

"importing plan" means the pension plan to which the assets
and liabilities will be transferred;

"initial valuation date" means the valuation date of the first
report filed or submitted following the coming into operation
of these regulations;

"market value" means the most probable price that would be
obtained for property in an arm's length sale in an open
market under conditions requisite to a fair sale, the buyer
and seller acting prudently, knowledgeably and willingly;

"normal cost" means the cost of pension benefits and ancillary
benefits with respect to a fiscal year of a pension plan
determined in accordance with the methods and actuarial
assumptions used in a going concern valuation;

"past service unfunded liability" means the amount of going
concern unfunded liability that results from the provision of
benefits with respect to employment prior to the effective date
of the pension plan or from an amendment to a plan that
provides benefits for employment prior to the date of the
amendment where the employment had not previously been
recognised for purposes of the provision of pension benefits;

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"prospective benefit increase" means an increase to a pension
benefit or ancillary benefit set out in the pension plan or
agreed to by the parties to a collective agreement, but not yet
in effect;

"report" unless otherwise specified means a report prepared by
an actuary;

"residual asset value" means the residual liabilities multiplied by
the lesser of

(a) the asset transfer ratio; and

(b) 1.00;

"residual liabilities" are the greater of

(a) the going concern liabilities; and

(b) the solvency liabilities;

of the pensions, deferred pensions, ancillary benefits or
pension benefits for which the employer has retained
responsibility;

"solvency assets" means the market value of investments held by
a pension plan plus any cash balances of the plan and
accrued or receivable income items of the plan, excluding the
value of any qualifying annuity contract of the plan;

"solvency deficiency", means the amount by which the sum of
the solvency liabilities exceeds the sum of the solvency
assets, as of the valuation date of a report;

"solvency excess" means the amount by which the sum of the
solvency assets exceed the sum of the solvency liabilities as of
the valuation date of a report;

"solvency liabilities", in relation to a report, means the liabilities
of a pension plan determined as if the plan had been wound
up on the valuation date of the report, but excluding
liabilities for

(a) any escalated adjustment;

(b) prospective benefit increases; and

(c) future salary increases;

"solvency valuation" means a valuation performed in accordance
with regulation 51(3);

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"special payment" means a payment or one of a series of
payments determined for the purpose of liquidating a going
concern unfunded liability or solvency deficiency in
accordance with regulations 40(1) and 40(2);

"surplus" in respect of a defined benefit provision of 

(a) an ongoing pension plan means the amount by which
the assets of the plan exceed the liabilities of the pension
plan where

(i) the assets of the plan are calculated on the basis of
the market value of the investments held by the
fund plus any cash balances and accrued or
receivable items;

(ii) the liabilities of the plan are calculated to be the
greater of the going concern liabilities and the
solvency liabilities; and

(b) a pension plan that is or is being wound up means the
amount by which the assets of the plan exceed the
solvency liabilities where the assets of the plan are
calculated on the basis of the market value of the
investments held by the fund plus any cash balances
and accrued or receivable items;

"transfer liabilities" are the greater of

(a) the going concern liabilities; and

(b) the solvency liabilities, but without the exclusions
referred to in the definition of solvency liabilities,

of the pensions, deferred pensions, ancillary benefits or
pension benefits for which the successor employer has
assumed responsibility;

"transferred members" means those members, former members
and persons entitled to a payment from a pension fund
whose benefits are subject to a transfer of assets and
liabilities in accordance with Part VI(C) of these regulations;

"transfer ratio" means the fraction obtained by dividing the
solvency assets of a pension plan by the solvency liabilities of
the plan calculated at the latest valuation date;

"valuation date" means the date as of which the assets and
liabilities are valued for the purposes of the going concern
and solvency valuations in a report;

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"wind up value" means the commuted value of a member's
entitlement under a defined benefit provision of a pension
plan determined as if the plan had been wound up on the
date of determination.

(2) Where, in respect of an investment in a pension plan, there
is no market value and the investment is issued or guaranteed by a
government, then, for the purpose of calculating solvency assets or a
transfer ratio, the book value of the investment shall be used.

(3) For the purposes of these Regulations, a going concern
unfunded liability, a past service unfunded liability, a solvency deficiency
or a transfer ratio, respectively, arises on the date specified in the report
as the date on which such going concern, unfunded liability, past service
unfunded liability, solvency deficiency or transfer ratio, as the case may
be, is determined.

B - Funding

Funding of defined benefit plan
40 (1) The total annual contributions to be made to a defined
benefit provision of a pension plan each year by the combination of
employer and member contributions shall be equal to the greater of—

(a) the amount required to fund the plan on a going concern
basis as specified in paragraph (2); and

(b) the sum of

(i) the normal cost determined in a going concern
valuation; and

(ii) the annual amount of special payments required to
amortise any solvency deficiency as at the valuation date
over an amortisation period not exceeding five years.

(2) The amount required to fund a defined benefit provision of a
pension plan on a going concern basis is equal to the sum of the
following elements of the going concern valuation for the year

(a) the normal cost;

(b) the special payments, if any, required to amortise the
past service unfunded liability;

(c) special payments required to amortise the actuarial
losses, less any special payments required to amortise
the actuarial gains;

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(d) the remaining special payments required to amortise the
going concern unfunded liability in the immediately
preceding reports prepared in accordance with
regulation 50(1), 51(1) or 51(4).

(3) The employer's required annual contributions shall be equal
to the total annual contribution determined in paragraph (1), less the
expected member contributions based on the member contribution rate
determined in paragraph (4), but shall not be less than zero.

(4) For the purposes of paragraph (1), members contributions
shall be in accordance with the plan provisions and the Act.

(5) The payments referred to in paragraph (1) and paragraph
(2) shall be made by the employer or the person who is required to make
contributions on behalf of the employer in accordance with paragraphs
(6) to (9).

(6) All sums received by the employer from the member,
including money withheld by payroll deduction or otherwise from the
member, as the member's contribution to the pension plan, shall be paid
into the pension fund within thirty days following the month in which the
sum was received or deducted.

(7) Employer contributions in respect of the normal cost for
each period covered by a report beginning on or after 1 August, 2004,
shall be paid into the pension fund, in monthly installments within thirty
days after the month for which contributions are payable.

(8) The amount of the installment referred to in paragraph (7)
shall be

(a) a total fixed dollar amount;

(b) a fixed dollar amount in respect of each member of the
pension plan; or

(c) a fixed percentage either of the portion of payroll related
to members of the pension plan or of the members'
contributions.

(9) Employer contributions for special payments with interest
at the going concern valuation interest rate, shall be paid into the
pension fund in equal monthly installments over a period of fifteen years
beginning on the valuation date of the report in which the unfunded
liability or actuarial loss was determined.

(10) Employer contributions for amounts required to amortise
any solvency deficiency with interest at the rate used to determine the
solvency deficiency, shall be paid into the pension fund in equal monthly

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installments over a period of five years beginning on the valuation date of
the report in which the solvency deficiency was determined.

(11) A surplus established under a going concern valuation may
be used to reduce or determine employer contributions to the plan until
the earlier of the date at which

(a) the plan is no longer in surplus on a going concern
basis; and

(b) the plan has a solvency deficiency,

as determined in a report.

C - Sales, Transfers and New Plans

Application for approval
41 (1) An application shall identify, by name and registration
number, the exporting plan(s) and the importing plan affected by the
transfer proposal, and the market value of assets and the value of the
liabilities, determined in accordance with Part VI C, to be transferred
from or to each applicable exporting or importing plan and must include
all the information, statements and reports required by Part VI C.

(2) Where a transfer of assets and liabilities results from a
transaction described in section 47(1) of the Act, the application shall
include those portions of the purchase and sale agreement and any
subsequent revisions to that agreement which relate to the transfer of
assets and liabilities.

Notice of Proposed Transfer
42 (1) Where an employer proposes to transfer assets and
liabilities from an exporting plan to an importing plan, the employer shall
give notice of his intention to do so to the following persons

(a) each member, former member and any other person
entitled to payment from the exporting plan;

(b) each member, former member and any other person
entitled to payment from the importing plan;

(c) each trade union that represents members of the
exporting plan; and

(d) each trade union that represents members of the
importing plan.

(2) The notice required under paragraph (1) shall contain

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(a) the name and registration number of each exporting
plan;

(b) the name and registration number of each importing
plan;

(c) the proposed effective date of transfer;

(d) in the case of a defined benefit provision of a pension
plan an explanation of the proposed transfer of assets
and liabilities, including the transfer ratio or the asset
transfer ratio, as applicable, of each of the exporting
plan and the importing plan;

(e) notice that copies of the report submitted or to be
submitted to the Commission in support of the transfer
of assets request, excluding information as to the
service, salary, pension benefits or other personal
information related to any specific person (unless that
person's prior consent is obtained), are or will be
available for review at the offices of the administrator of
the exporting plan and, where different, at the offices of
the administrator of the importing plan;

(f) where the plan is in a surplus position, the intended
treatment of surplus and the basis for the allocation, if
any, of the surplus;

(g) a statement that no assets or liabilities may be
transferred until the approval of the Commission is
obtained; and

(h) a statement that comments concerning the proposed
transfer may be submitted to the Commission within a
thirty-day period following receipt of the notice.

(3) The notice required pursuant to paragraph (1) shall be
transmitted by personal delivery or by registered mail, however the
Commission may, where it considers it appropriate to do so, accept
another form of notice or another method of delivery, or both.

(4) The employer shall submit to the Commission a copy of the
notice required under paragraph (1) before transmitting it to the persons
required under this regulation.

(5) Copies of the notices given pursuant to paragraph (1) shall
be submitted to the Commission with the application for the approval of
the transfer, together with a certification by the employer in respect of
each notice transmitted as to

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(a) the date on which the last notice was transmitted;

(b) the persons or bodies to whom the notice was
transmitted; and

(c) the method of delivery of the notice.

Reports and Statements

Defined Contribution Provisions
43 (1) Where an amount is transferred in accordance with Part VI
C from

(a) the defined contribution provision of a pension plan to
the defined contribution provision of another pension
plan, the amount transferred shall not be less than the
value of the account balances of the transferred
members;

(b) the defined contribution provision of a pension plan, to
the defined benefit provision of another pension plan,
the amount transferred shall not be less than the value
of the account balances of the transferred members, and
the commuted value of the defined benefit which is
provided, determined at the date of transfer, shall not be
less than the amount transferred;

(c) the defined benefit provision of a pension plan to the
defined contribution provision of another pension plan,
the amount transferred shall not be less than the wind
up value, determined at the date of the transfer, in
respect of each transferred member.

(2) The Commission shall not approve a transfer under
paragraph (1)(c) where the funded ratio of the exporting defined benefit
provision is less than one, until the employer contributes such amount
as is required to fully fund the value of the benefits to be transferred.

(3) An explanation of the proposed transfer of assets and
liabilities and a statement that such transfer complies with paragraph (1)
shall be prepared by an accountant, an actuary or a person who is
authorised by a financial institution.

Defined Benefit Provisions - Full Transfers
44 (1) Where all of the assets and liabilities are transferred from a
defined benefit provision of a pension plan to another defined benefit
provision, reports, prepared at the effective date of transfer and in
accordance with this regulation, shall be submitted to the Commission in

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support of the application, however the Commission may, where it
considers it appropriate so to do, permit a report to be prepared with a
date other than the effective date of transfer.

(2) For the purpose of paragraph (1), the actuarial methods and
assumptions used in preparing the solvency valuations in the reports for
the exporting plan and the importing plan shall be consistent.

(3) In respect of each exporting plan, the report must include

(a) a going concern valuation and a solvency valuation;

(b) the transfer ratio; and

(c) the amount of any going concern unfunded liability or
solvency deficiency, or both, and the amount of any
special payments, including the amortisation period
required to liquidate the going concern unfunded liability
or solvency deficiency, or both, must be identified.

(4) In lieu of preparing a report for each exporting plan, a
single consolidated report, which includes information relating to each of
the exporting plans, may be prepared.

(5) A report prepared for the importing plan must include a
going concern valuation and a solvency valuation and meet the
requirements of paragraphs (6) to (9) of this regulation.

(6) Where the report for the importing plan indicates that
special payments are required, the scheduled amount of each monthly
amortisation payment must be no less than the sum of the
corresponding scheduled amounts of the monthly special payments
required for the exporting plans immediately prior to any asset transfers.

(7) For the purposes of paragraph (6), the amortisation period
should be shortened, if appropriate, and the final amortisation payment
adjusted accordingly.

(8) Except as permitted by paragraph (9), payments which are
not less than the scheduled amount of the monthly amortisation
payments for the importing plan must be continued until the date on
which the going concern unfunded liability or solvency deficiency, or
both, identified for the importing plan at the effective date of transfer is
fully amortised or otherwise liquidated.

(9) Where an actuarial gain or solvency excess emerges after
the effective date of any of the reports, the amortisation payment
schedule established in the applicable report may be adjusted in
accordance with regulation 51(1)(g).

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Defined Benefit Provisions - Partial Transfers
45 (1) Where less than all of the assets and liabilities are
transferred from a defined benefit provision of a pension plan to another
defined benefit provision, reports, prepared at the effective date of
transfer and in accordance with this regulation, shall be submitted to the
Commission in support of the application, however, the Commission
may, where it considers it appropriate so to do, permit a report to be
prepared with a date other than the effective date of transfer.

(2) In respect of each exporting plan, the report must include

(a) a going concern valuation and a solvency valuation;

(b) the asset transfer ratio;

(c) the going concern liabilities, solvency liabilities and asset
transfer value of the benefits for which the importing
plan has assumed responsibility;

(d) the going concern liabilities, solvency liabilities and
residual asset value of the benefits for which the
exporting plan has retained responsibility; and

(e) the amount of and the basis for determination of the
assets to be transferred to the importing plan.

(3) For the purposes of paragraph (2)(e), assets having a market
value as at the effective date of transfer of not less than the lower of the
asset transfer value or the solvency liabilities reported under paragraph
(2)(c) shall be transferred from the exporting pension plan to the
importing pension plan.

(4) The Commission shall refuse to consent to a transfer under
this regulation if after such a transfer the market value of the assets
remaining in the exporting pension plan as at the effective date of
transfer would be less than the lower of the residual asset value or the
solvency liabilities reported under paragraph (2)(d).

(5) Notwithstanding paragraphs (3) and (4), the Commission
may, under exceptional circumstances, require or permit a transfer of
assets determined using some other equitable basis.

(6) A report prepared for the importing plan must include a
going concern valuation and a solvency valuation and meet the
requirements of paragraph (7).

(7) In the preparation of the report required under paragraph
(6), there may be included as past service unfunded liabilities, the net
increase in liabilities as a result of

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(a) benefit improvements granted to the transferred
members on the date they become members of the
importing pension plan; and

(b) the difference in going concern liabilities arising as a
result of the differences in actuarial funding method or
assumptions between the exporting pension plan and
the importing pension plan as reported in the last report
submitted under the Act and the regulations.

Plan Amendments
46 (1) Amendments to an exporting plan, which provide for a
transfer of assets and liabilities to an importing plan, shall be submitted
to the Commission in support of the application.

(2) Amendments to an importing plan which provide for a
transfer of assets and liabilities from an exporting plan shall be
submitted to the Commission in support of the application.

Administrator to Retain Member Records
47 (1) The administrator of an importing plan shall maintain and
retain a record of information about each exporting plan at the effective
date of transfer.

(2) The information referred to in paragraph (1) shall be
sufficient to identify all the members, former members and any other
persons entitled to payment from each exporting plan on the effective
date of transfer and their respective benefits as at the effective date of
transfer.

(3) The record of information about each exporting plan shall
include the names of the members, former members and any other
persons, their respective benefits (including accrued pension benefits
and ancillary benefits), their last known address at the effective date of
transfer, and the market value of the assets, the going concern liabilities
and the solvency liabilities of the plan.

(4) Paragraphs (1), (2) and (3) also apply to the administrator of
the importing plan with respect to the members, former members and
any other persons entitled to a payment from the importing plan prior to
any transfer of assets to such plan.

Effective Date
48 Part VI C of the regulations shall be effective with respect to
transfers which have an effective date on or after 1 August, 2004.

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D - Calculation of Assets and Liabilities and Reports

Method of calculating assets and liabilities
49 (1) The assets and liabilities in a defined benefit provision of a
pension plan shall

(a) be determined in a manner that complies with the
Standards of Practice of the Canadian Institute of
Actuaries or a corresponding British or American
equivalent that may be approved for this purpose by the
Commission; and

(b) be determined as at the effective date of the valuation of
the pension plan.

(2) The assets and liabilities in a defined contribution provision
of a pension plan shall be determined using the market value of the
accumulated contributions, with investment income, made to the
pension fund by or in respect of the members or former members, less
any applicable fees.

Initial valuation report
50 (1) The initial valuation report required to be submitted with an
application for registration of a pension plan shall following the coming
into operation of these regulations, set out, on the basis of an ongoing
concern valuation

(a) the normal cost in the year of registration of the plan
("the initial year") and the formula for computing normal
cost in subsequent years up to the date of the next
report ("subsequent years");

(b) an estimate of the normal cost in each of the subsequent
years up to the date of the next report;

(c) a calculation of the employer's required contributions in
each of the initial year and the subsequent years in
accordance with the First Schedule to the Act and
regulation 40(3);

(d) estimated total employee contributions, if any, during
each of the initial year and subsequent years up to the
date of the next report;

(e) the past service unfunded liability or surplus, if any, as
at the initial valuation date;

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(f) where there is a past service unfunded liability, the
special payments required to amortise it over a term not
exceeding fifteen years;

(g) information respecting escalated adjustments, if any;
and

(h) such other information that may be required by the
Commission.

(2) If the actuary is of the opinion that there is a solvency
deficiency, the report shall also set out, on the basis of a solvency
valuation

(a) the amount of the solvency deficiency and the special
payments needed to amortise it over a term not
exceeding five years; and

(b) whether the transfer ratio is less than 1.00 and if it is,
the transfer ratio.

Triennial report and solvency concerns
51. (1) The report referred to in section 7(3)(c)(i) of the Act (in these
regulations referred to as "the triennial report") shall contain the
following information-

(a) the normal cost in the year following the valuation date
of the report ("the first year") and the formula for
computing normal cost in subsequent years up to the
date the next report ("the following years") is due to be
submitted to the Commission;

(b) an estimate of the normal cost in each of the following
years up to the date of the next report;

(c) a calculation of the employer's required contributions in
each of the first year and the following years in
accordance with the First Schedule to the Act and
regulation 40(3);

(d) estimated total employee contributions, if any, during
each of the first year and the following years up to the
date of the next report;

(e) the special payments to be made in accordance with
regulation 40(2);

(f) the present value of future special payments remaining
to be paid after the valuation date;

(g) information respecting escalated adjustments, if any;

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(h) the actuarial gain or actuarial loss in the pension plan
and

(i) where there is an actuarial gain, the special
payments that will amortise any decrease in a going
concern unfunded liability resulting from the gain
over a term not to exceed fifteen years; or

(ii) where there is an actuarial loss, the special
payments that will amortise any increase in a going
concern unfunded liability resulting from the loss
over a term not to exceed fifteen years;

(i) the going concern liabilities as at the valuation date;

(j) the book and market values of the pension plan assets
as at the valuation date; and

(k) such other information that may be required by the
Commission.

(2) The reports referred to in regulations 50(1) and 51(1) shall
be prepared in a manner that complies with the Standards of Practice of
the Canadian Institute of Actuaries, or a corresponding British or
American equivalent approved for this purpose by the Commission.

(3) If the actuary is of the opinion that there is a solvency
deficiency, the triennial report shall also set out, on the basis of a
solvency valuation

(a) the amount of the solvency deficiency and the special
payments required to amortise it over a term not to
exceed five years;

(b) any liabilities excluded from the report including
escalated adjustments and prospective benefits
increases;

(c) an estimate of the wind up expenses; and

(d) whether the transfer ratio is less than 1.00, and if it is,
the transfer ratio.

(4) Where a report indicates a solvency concern, a subsequent
report shall be prepared within one year from the valuation date of the
report which identified the solvency concern, or by such earlier date as
the Commission may specify.

(5) For the purposes of this regulation a solvency concern
exists when

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(a) the ratio of the solvency assets to the solvency liabilities
is less than 0.8; or

(b) the solvency liabilities exceed the solvency assets by
more than $500,000.00 and the ratio of the solvency
assets to the solvency liabilities is less than 0.9.

Report on amendment of defined benefit plan
52. (1) An administrator of a defined benefit pension plan shall
submit a report of an actuary to the Commission if an amendment to the
plan reduces or increases contributions or creates or changes a going
concern unfunded liability or solvency deficiency.

(2) A report referred to in paragraph (1) shall

(a) contain the information required to be included in a
triennial report, under regulation 51, that may be
affected by the amendment; and

(b) be submitted to the Commission within six months from
the date that the amendment is required to be submitted
to the Commission for registration.

Actuarial Reports
53. An actuary who prepares a report under these regulations
shall

(a) use assumptions which are appropriate for the pension
plan and methods consistent with-

(i) sound principles established by precedent or by
common usage within the actuarial profession;

(ii) the requirements of the Act and the regulations; and

(b) certify that the report meets the requirements of the Act
and the regulations.

E - Supplementary Provisions

Protection of life annuity contracts
54. (1) An annuity contract purchased under a pension plan
registered under the Act shall be administered in accordance with the
terms of the plan, as a pension or benefit under the Act and the
regulations, and shall contain a provision which states that, except as
permitted under the Act, no money transferred, including interest, for
the purchase of such annuity, shall be assigned, charged, anticipated or
given as security.

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(2) Any purported assignment, charge, anticipation or giving as
security, as the case may be, of an annuity contract shall be void.

(3) Subject to paragraph (4), prior to the expiry of a guaranteed
period of an annuity, the annuitant may only commute the remaining
value of the annuity for the purpose of transferring it to a prescribed
retirement product.

(4) Notwithstanding paragraph (3), where an annuitant's
surviving beneficiary inherits an annuity with an unexpired guaranteed
period, the surviving beneficiary may commute the annuity in favour of a
lump sum payment.

(5) A purported commutation otherwise than in accordance
with paragraph (3) or (4) is void.

(6) In calculating the amount of the annuity purchased under a
defined contribution pension plan, the sex of the annuitant may be taken
into account.

(7) If the pension plan from which money was originally
transferred to an annuity contract provided for variation in the terms of
payment or other benefit in accordance with section 34 of the Act then
the annuity contract shall have a similar provision.

Calculation of commuted value
55. (1) The commuted value of a pension or benefit determined
under a defined benefit provision of a pension plan shall

(a) be determined in a manner that complies with the
Canadian Institute of Actuaries Recommendations for
the Computation of Transfer Values from Registered
Pension Plans, or a corresponding British or American
equivalent that may be approved for this purpose by the
Commission; and

(b) be determined as at the date of termination of
membership, death, retirement, or termination of a
pension plan.

(2) The commuted value of a pension or benefit determined
under a defined contribution provision of a pension plan shall be the
value of the accumulated contributions, with investment earnings, made
to the pension fund by or in respect of the member or former member.

(3) If, at the date of determination of the commuted value of the
pension or benefit, the former member has an unconditional entitlement
to optional forms of a pension or benefit or to optional commencement

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dates, the option that has the greatest value shall be used to determine
the commuted value.

Employer holds money in trust for member
56. (1) Where an employer receives money from a member under
an arrangement that the employer will pay the money into a pension
fund as the member's contribution under the pension plan, the employer
shall be deemed to hold the money in trust for the member until the
employer pays the money into the pension fund.

(2) For the purposes of paragraph (1), money withheld by an
employer, whether by payroll deduction or otherwise, from money
payable to a member shall be deemed to be money received by the
employer from the member.

(3) An employer who is required to pay contributions to a
pension fund shall be deemed to hold in trust for the beneficiaries of the
pension plan an amount of money equal to the employer contributions
due and not paid into the pension fund.

(4) Where a pension plan is wound up in whole or in part, an
employer who is required to pay contributions to the pension fund shall
be deemed to hold in trust for the beneficiaries of the pension plan an
amount of money equal to employer contributions accrued to the date of
the wind up but not yet due under the plan or regulations.

(5) The administrator of a pension plan has a lien and charge
on the assets of the employer in an amount equal to the amounts
deemed to be held in trust under paragraphs (1), (3) and (4).

(6) The assets or property of an employer or the proceeds of
sale of the assets or property shall not be distributed to any person
entitled thereto until provision has been made for the payment into a
pension fund of any amount payable by the employer.

(7) Paragraphs (1), (3) and (4) apply whether or not the money
has been kept separate and apart from other money or property of the
employer.

(8) Paragraphs (1) to (7) apply with necessary modifications in
respect of money to be paid to an insurance company that guarantees
pension benefits under a pension plan.".

Made this 13th day of August, 2004

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Minister of Finance

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