Revised Guidance: Statutory Discharge of Annuity Buy-outs

The Commission is revising its expectations from our guidance issued in Pension Bulletin 2022-03 – Proclamation of amendments to the Pension Benefits Act and the General Regulation under the Pension Benefits Act.

At the time this bulletin was issued, additional parameters for the statutory discharge of annuity buy-outs were under consideration and the Superintendent of Pensions set out recommendations for pension administrators based on this. 

Certain elements of the notice referred to under the 2022 guidance are being revised. The revised guidance is as follows:  

• A notice of the purchase should be sent to the individuals in respect of whom a purchase is made. The notice should include:
  • A statement that the administrator has purchased a deferred pension, or a pension, as applicable, for the individual from an insurance company.
  • A statement that the deferred pension, or pension, as applicable, is the same as what would have been provided under the pension plan had the purchase not been made.
  • The date of the purchase.
  • The insurance company’s group policy number and the certificate number issued by the insurance company that confirms the purchase.
  • The name and contact information of the insurance company.
  • A statement that if the administrator is discharged under Section 33 of the Pension Benefits Act, the individual has no further rights or entitlement to any payment from the pension plan, except in certain circumstances where the pension plan is wound up and has a surplus.
• The following funding test should be met:
  • On the day after the date of purchase, the solvency ratio of the pension plan should be, 
    • at least 1.0, if the solvency ratio of the pension plan as set out in the most recently filed actuarial valuation report for the plan before the date of purchase was at least 1.0, or
    • at least equal to the greater of 0.85 and the solvency ratio of the pension plan as set out in the most recently filed actuarial valuation report for the plan before the date of purchase, if the solvency ratio was less than 1.0.
  • If the solvency ratio after the date of purchase is less than the ratio noted above, the employer should pay into the pension fund, within 90 days after the date of the purchase, an amount sufficient to raise the solvency ratio so that it is at least equal to the solvency ratio noted above.

We anticipate that additional parameters may be introduced in future regulations. Stakeholders will be notified of any new regulatory developments or guidance updates as they become available. 

For any questions, please contact the Pension Division of the Financial and Consumer Services Commission of New Brunswick at 1-866-933-2222 or by email at info@fcnb.ca.