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Newfoundland and Labrador
Regulation 2008


NEWFOUNDLAND AND LABRADOR REGULATION 30/08

NEWFOUNDLAND AND LABRADOR
REGULATION 30/08

Solvency Funding Relief Regulations
under the
Pension Benefits Act, 1997
(O.C. 2008-137)

(Filed May 26, 2008)

Under the authority of section 78 of the Pension Benefits Act, 1997, the Lieutenant-Governor in Council makes the following regulations.

Dated at St. Johnís, May 21, 2008

Gary Norris
Clerk of the Executive Council

REGULATIONS

Analysis


††††††† 1. Short title

††††††† 2. Interpretation

††††††† 3. Application

††††††† 4. Non-application

††††††† 5. Filing date application

††††††††††††† PART I
NEW 5 YEAR FUNDING

††††††† 6. General funding rules

††††††††††††† PART II
NEW 10 YEAR FUNDING

††††††† 7. General funding rules

††††††† 8. Information to be provided

††††††† 9. Documents etc. to be filed

††††† 10. New solvency deficiency

††††† 11. Termination of plan

††††† 12. Ceasing 10 year funding

††††† 13. Calculating surplus

††††† 14. Plan with surplus

††††† 15. Plan without surplus

††††††††††††† PART III
10 YEAR FUNDING WITH LETTERS OF CREDIT

††††† 16. General funding rules

††††† 17. Letter of credit

††††† 18. When letter of credit not required

††††† 19. Where face amount less than amount required

††††† 20. Trust agreement

††††† 21. Documents etc. to be filed

††††† 22. Statement to members

††††† 23. Reduction of the face amount of a letter of credit

††††† 24. New solvency deficiency

††††† 25. Failure to pay letter of credit

††††† 26. Occurrence of default

††††† 27. Ceasing 10 year funding

††††† 28. Repeal

††††† 29. Commencement


Short title

††††††† 1. These Regulations may be cited as the Solvency Funding Relief Regulations.

Interpretation

††††††† 2. (1) In these Regulations,

†††††††††††† (a)"acceptable rating" means the rating given by a credit rating agency to an issuer at the time of the issuance or renewal of a letter of credit that is at least equal to one of the following ratings:

††††††††††††††††††††† (i)A, from Dominion Bond Rating Service Limited,

†††††††††††††††††††† (ii)A, from Fitch Ratings,

††††††††††††††††††† (iii)A2, from Moody's Investors Service, or

††††††††††††††††††† (iv)A, from Standard & Poor's Ratings Services;

†††††††††††† (b)"Act" means the Pension Benefits Act, 1997;

†††††††††††† (c)"bank" means a bank or authorized foreign bank within the meaning of section 2 of the Bank Act (Canada);

†††††††††††† (d)"credit union" means a credit union to which the Credit Union Act applies or a cooperative credit society or credit union incorporated and regulated by or under an Act of Canada or another province;

†††††††††††† (e)"default" means the occurrence of one of the following:

††††††††††††††††††††† (i)the written notification to the superintendent that the administrator intends to terminate or wind up the whole plan under subsection 60(1) of the Act,

†††††††††††††††††††† (ii)the amendment of the plan, resolution by the employer or coming into force of any other measure that effects the termination of the whole plan,

††††††††††††††††††† (iii)the superintendent's declaration under subsection 59(1) of the Act that terminates the whole plan,

††††††††††††††††††† (iv)the filing of any application or petition by the employer, or against the employer, under the Companies' Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada) or the Winding-up and Restructuring Act (Canada),

†††††††††††††††††††† (v)the termination of the whole plan,

††††††††††††††††††† (vi)the non-renewal of a letter of credit referred to in Part III for its full face amount unless

††††††††††††††††††††††††††† (A)it has been replaced by another letter of credit for the same face amount at least 30 days before the beginning of the following plan year,

††††††††††††††††††††††††††† (B)an amount equal to the face amount of the letter of credit has been remitted to the pension fund at least 30 days before the beginning of the following plan year, or

††††††††††††††††††††††††††† (C)the face amount has been reduced in accordance with section 23, or

†††††††††††††††††† (vii)the failure by an employer to comply with a direction issued by the superintendent under section 11 of the Act with respect to the face amount of the letters of credit required by subsection 16(2);

††††††††††††† (f)"holder" means a trust company that is licensed to carry on business in Canada and that has entered into a trust agreement with the employer or, if the employer is not the administrator, with the employer and the administrator;

†††††††††††† (g)"initial solvency deficiency" means the solvency deficiency of a plan that emerged on the date on which the valuation that identified the deficiency was performed, as reported in an actuarial report filed with the Superintendent of Pensions that values the plan as of a date between January 1, 2007 to January 1, 2009;

†††††††††††† (h)"issuer" means a bank or credit union that has an acceptable rating and that is not the employer or affiliated with the employer within the meaning of subsection 2(2) of the Canada Business Corporations Act; and

††††††††††††† (i)"special payment" means a payment or one of a series of payments that is determined in accordance with section 12 of the Pension Benefits Act Regulations, or section 6, 7 or 16 of these Regulations.

†††††††††††† (2)Except as otherwise provided, expressions used in these Regulations have the same meaning as in the Pension Benefits Act Regulations.

Application

††††††† 3. (1) These Regulations apply to the funding of a defined benefit plan and, except as otherwise provided, the Pension Benefits Act Regulations also apply to the funding of a plan under these Regulations.

†††††††††††† (2)For the purposes of these Regulations, an initial solvency deficiency shall be calculated in accordance with the solvency deficiency in section 11 of the Pension Benefits Act Regulations, except that

†††††††††††† (a)the present value of any special payment referred to in subparagraphs 11(c)(ii), (iii) and (iv) of the Pension Benefits Act Regulations calculated in respect of the funding of a solvency deficiency that emerged before the emergence of the initial solvency deficiency shall be zero; and

†††††††††††† (b)for the purposes of Parts II and III, that definition shall be interpreted as including the present value of the special payments calculated with respect to an initial unfunded liability that are due in the next 10 years.

†††††††††††† (3)For the purposes of these Regulations, any special payment that would have been required to be made under paragraph 12(3)(d) of the Pension Benefits Act Regulations, with respect to the funding of a solvency deficiency that emerged before the emergence of the initial solvency deficiency is not required to be made.

†††††††††††† (4)In the case of an inconsistency between these Regulations and the Pension Benefits Act Regulations, these Regulations shall prevail.

Non-application

††††††† 4. These Regulations do not apply to

†††††††††††† (a)a plan that is established after January 1, 2007 unless the plan is formed as a result of a merger of plans one or more of which was established before January 1, 2007 or is formed as a result of a splitting of a plan that was established before January 1, 2007; or

†††††††††††† (b)a plan defined as a multi-employer pension plan under the Pensions Benefits Act, 1997.

Filing date application

††††††† 5. (1) Plans may only be funded under these Regulations if all of the payments that are owed to the pension fund before the day on which the initial solvency deficiency emerges, as required by section 8 of the Pension Benefits Act Regulations, have been made as of the filing date of the actuarial report that shows the emergence of that initial solvency deficiency.

†††††††††††† (2)Notwithstanding section 12 of the Pension Benefits Act Regulations, the funding of a plan shall be considered to meet the standards for solvency if the funding is in accordance with Part I, II or III of these Regulations.

PART I
NEW 5 YEAR FUNDING

General funding rules

††††††† 6. (1) Notwithstanding paragraph 12(3)(d) of the Pension Benefits Act Regulations, an initial solvency deficiency of a plan may be funded by special payments sufficient to liquidate the initial solvency deficiency by equal annual payments over a period not exceeding 5 years from the day on which the initial solvency deficiency emerged.

†††††††††††† (2)Where the initial solvency deficiency is funded in accordance with this Part, the administrator of the plan shall notify the superintendent in writing at the time of filing of an actuarial report after the coming into force of these Regulations.

†††††††††††† (3)Where a solvency deficiency emerges after the day on which the initial solvency deficiency emerged, the new solvency deficiency shall be calculated, for the purpose of paragraph 12(3)(d) of the Pension Benefits Act Regulations, in accordance with a solvency valuation in section 11 of those Regulations and that valuation shall be interpreted as including the present value of the special payments referred to in subsection (1).

PART II
NEW 10 YEAR FUNDING

General funding rules

††††††† 7. (1) Notwithstanding paragraph 12(3)(d) of the Pension Benefits Act Regulations, an initial solvency deficiency of a plan may be funded in accordance with Part I, but the remittance to the pension fund of a portion of the special payments determined under that Part may be deferred as if the initial solvency deficiency were funded by special payments sufficient to liquidate the initial solvency deficiency by equal annual payments over a period not exceeding 10 years from the day on which the initial solvency deficiency emerged.

†††††††††††† (2)The initial solvency deficiency may be funded in accordance with this Part only if less than one third of the members and less than one third of the former members excluding members object before the date indicated in the statement referred to in paragraph 8(1)(j).

†††††††††††† (3)Notwithstanding the fact that the special payments set out in subsection (1) may be made over a period that exceeds the period applicable under Part I, for the purposes of subsection 32(1) of the Act, the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with that Part from the day on which the initial solvency deficiency emerged, as adjusted to take into account the actuarial gains that were applied under subsection 13(1) of the Pension Benefits Act Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall be considered to be an amount accrued to the pension fund.

†††††††††††† (4)Interest shall be calculated by using the interest rate that was assumed in valuing the liabilities of the plan for the purpose of calculating the initial solvency deficiency.

Information to be provided

††††††† 8. (1) The administrator shall provide the following information to the members and former members:

†††††††††††† (a)the solvency ratio of the plan as of the day on which the initial solvency deficiency emerged;

†††††††††††† (b)the amount of the initial solvency deficiency;

†††††††††††† (c)a description of the extent to which the members and former membersí benefits would be reduced if the plan were fully terminated and wound up with the solvency ratio referred to in paragraph (a);

†††††††††††† (d)a statement indicating that extending the period for funding the initial solvency deficiency as permitted by this Part may result in a lower value of the plan assets during the funding period than would be the case if the deficiency were funded over a period not exceeding 5 years and that the longer funding period may also extend the period during which the plan assets are less than the plan liabilities;

†††††††††††† (e)the special payments that would have been made during the first plan year covered by the actuarial report referred to in paragraph 9(b) if the initial solvency deficiency were to be funded in accordance with Part I;

††††††††††††† (f)the special payments that are to be made during the first plan year covered by the actuarial report referred to in paragraph 9(b) if the initial solvency deficiency is funded in accordance with this Part;

†††††††††††† (g)a statement indicating that an actuarial report is to be filed at least annually with the superintendent while the plan is being funded in accordance with this Part;

†††††††††††† (h)a statement indicating that the plan may be funded in accordance with this Part only if less than one third of the members object and less than one third of the former members object;

††††††††††††† (i)a statement indicating that the superintendent's approval is not required to fund the initial solvency deficiency in accordance with this Part;

††††††††††††† (j)a statement indicating that the members and former members may object to the proposal to fund the plan in accordance with this Part by sending an objection to the administrator at the address and by the date indicated in the statement, and that date shall not be less than 30 days after the day on which the other information required to be provided under this section is provided by the administrator;

†††††††††††† (k)a statement indicating that if the plan is funded in accordance with this Part, amendments to the plan that increase the pension benefits will be restricted for the first 5 plan years of funding in accordance with this Part; and

††††††††††††† (l)a statement setting out the right of access to the documents described in subsection 25(7) of the Act.

Documents etc. to be filed

††††††† 9. The administrator shall file the following documents and information with the superintendent:

†††††††††††† (a)written notification that the initial solvency deficiency is to be funded in accordance with this Part;

†††††††††††† (b)the actuarial report valuing the plan as of the day on which the initial solvency deficiency emerged;

†††††††††††† (c)a written statement confirming that a resolution of the board of directors of the employer has been passed, if the employer is a corporation, or, if the employer is not a corporation, an approval of the persons who have the authority to direct or authorize the actions of that body, has been given, authorizing the special payment schedule calculated in accordance with this Part; and

†††††††††††† (d)a written statement confirming that the information set out in section 8 has been provided to the members and former members and that less than one third of the members have objected and less than one third of the former members have objected.

New solvency deficiency

††††† 10. Where a solvency deficiency emerges after the day on which the initial solvency deficiency emerged, the new solvency deficiency shall be calculated, for the purposes of paragraph 12(3)(d) of the Pension Benefits Act Regulations, in accordance with a solvency valuation in section 11 of those Regulations, and that the valuation shall be interpreted as including

†††††††††††† (a)the present value of the special payments referred to in section 7; and

†††††††††††† (b)the present value of the special payments calculated with respect to an initial unfunded liability that are due in the period that is the greater of

††††††††††††††††††††† (i)the 5 years following the emergence of the new solvency deficiency, and

†††††††††††††††††††† (ii)the period then remaining of the 10 years following the emergence of the initial solvency deficiency.

Termination of plan

††††† 11. Where a plan is fully terminated and on the day on which it terminates the liabilities of the plan exceed its assets, the lesser of the amount determined in subsection 7(3) and the amount by which the liabilities of the plan exceed its assets shall immediately be remitted to the pension fund.

Ceasing 10 year funding

††††† 12. (1) A plan may cease to be funded under this Part, beginning on the first day of a plan year, by giving written notice to the superintendent not later than 6 months after the beginning of that plan year.

†††††††††††† (2)The notice shall indicate whether the plan has a surplus as of the first day of the plan year.

†††††††††††† (3)Where funding ceases, section 12 of the Pension Benefits Act Regulations applies in respect of the plan except as otherwise provided under this Part.

Calculating surplus

††††† 13. A surplus in respect of a plan shall be determined in the manner prescribed by section 19 of the Pension Benefits Act Regulations as if the plan had been fully terminated.

Plan with surplus

††††† 14. Where a plan ceases to be funded in accordance with this Part and the plan has a surplus as of the first day of the plan year, this Part ceases to apply to the plan on the first day of that plan year.

Plan without surplus

††††† 15. (1) Where a plan ceases to be funded in accordance with this Part and the plan does not have a surplus as of the first day of the plan year, section 12 of the Pension Benefits Act Regulations applies except as follows:

†††††††††††† (a)when funding ceases before the sixth plan year,

††††††††††††††††††††† (i)the administrator shall have an actuarial report prepared in which the present value of the special payments referred to in section 7 shall be zero valuing the plan as of the first day of the plan year in which funding ceases,

†††††††††††††††††††† (ii)the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with Part I from the day on which the initial solvency deficiency emerged to the day on which funding ceases, as adjusted to take into account the actuarial gains that were applied under subsection 13(1) of the Pension Benefits Act Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund,

††††††††††††††††††† (iii)a remaining initial solvency deficiency disclosed by the actuarial report, which shall be calculated by including the amount remitted in accordance with subparagraph (ii) as an asset of the pension fund, shall be considered to have emerged as of the day on which the initial solvency deficiency emerged,

††††††††††††††††††† (iv)the remaining initial solvency deficiency calculated under subparagraph (iii) shall be funded by special payments sufficient to liquidate that initial solvency deficiency by equal annual payments over a period not exceeding 5 years minus the number of years that the plan was funded in accordance with this Part, and

†††††††††††††††††††† (v)the special payments set out in section 7 shall continue to be made until the first special payment required to fund the remaining initial solvency deficiency referred to in subparagraph (iii) is made to the pension fund; and

†††††††††††† (b)when funding ceases after the fifth plan year,

††††††††††††††††††††† (i)the administrator shall have an actuarial report prepared as of the first day of the plan year in which funding ceases, and

†††††††††††††††††††† (ii)the amount by which the aggregate amount of special payments that would have been made to the pension fund in accordance with Part I from the day on which the initial solvency deficiency emerged to the day on which funding ceases, as adjusted to take into account the actuarial gains that were applied under subsection 13(1) of the Pension Benefits Act Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund.

†††††††††††† (2)Interest shall be calculated by using the interest rate that was assumed in valuing the liabilities of the plan for the purpose of calculating the initial solvency deficiency.

PART III
10 YEAR FUNDING WITH LETTERS OF CREDIT

General funding rules

††††† 16. (1) Notwithstanding paragraph 12(3)(d) of the Pension Benefits Act Regulations, an initial solvency deficiency of a plan may be funded by special payments sufficient to liquidate the initial solvency deficiency by equal annual payments over a period not exceeding 10 years from the day on which the initial solvency deficiency emerged.

†††††††††††† (2)The initial solvency deficiency may be funded in accordance with this Part where the employer

†††††††††††† (a)obtains letters of credit for each of the first 5 plan years of funding under this Part, for the amount representing the difference between the present value, at the end of each plan year, of the remaining special payments under this Part and the present value of the remaining special payments that would have been required to be made to liquidate the initial solvency deficiency as if it had been funded under Part I; and

†††††††††††† (b)maintains letters of credit for the sixth plan year of funding and for each plan year after that year, representing the present value at the beginning of each plan year of the remaining special payments under this Part.

†††††††††††† (3)The present value of the remaining special payments shall be determined by using the interest rate that was assumed in valuing the liabilities of the plan for the purpose of calculating the initial solvency deficiency.

Letter of credit

††††† 17. (1) A letter of credit required by this Part shall be an irrevocable, unconditional standby letter of credit that

†††††††††††† (a)is in accordance with the rules of International Standby Practices 1998 (publication No. 590 of the International Chamber of Commerce);

†††††††††††† (b)is payable only in Canadian currency;

†††††††††††† (c)is issued or confirmed by an issuer who is a member of the Canadian Payments Association that has been assigned an acceptable rating; and

†††††††††††† (d)provides that

††††††††††††††††††††† (i)the letter of credit is made out to the holder's benefit,

†††††††††††††††††††† (ii)the issuer will pay the face amount of the letter of credit on demand from the holder without inquiring whether the holder has a right to make the demand,

††††††††††††††††††† (iii)the bankruptcy of the employer shall have no effect on the rights and obligations of the issuer and the holder set out in the letter of credit,

††††††††††††††††††† (iv)the letter of credit will expire on the day on which the plan's year ends,

†††††††††††††††††††† (v)the letter of credit will automatically be renewed for the full face amount for further one-year periods on the expiry date referred to in subparagraph (iv) unless the issuer notifies the holder, in writing, of the non-renewal not less than 90 days before the expiry date, and

††††††††††††††††††† (vi)the letter of credit may not be amended during the term of the letter of credit and may not be assigned except to another holder.

†††††††††††† (2)A letter of credit shall be obtained not later than the day on which the actuarial report is filed with the superintendent, under subsection 16(2) of the Act, for the first plan year of funding, and at least 30 days before the beginning of each subsequent plan year that is covered by it.

†††††††††††† (3)The letter of credit shall immediately be provided to the holder.

When letter of credit not required

††††† 18. Where separate letters of credit have been obtained for each plan year, a letter of credit is not required to be automatically renewed after the fifth year following the plan year for which it was obtained.

Where face amount less than amount required

††††† 19. Where the face amount of a letter of credit obtained or maintained in accordance with this Part for a plan year is less than the amount required by subsection 16(2) for that plan year, the employer shall make up the difference either by increasing the amount of letters of credit or by making additional payments to the pension fund no later than on the day on which the next quarterly payment is made to the pension fund in accordance with subsection 12(3) of the Pension Benefits Act Regulations.

Trust agreement

††††† 20. (1) The employer and, where the employer is not the administrator of the plan, the administrator shall enter into a trust agreement or shall amend any existing trust agreement it may have with the holder regarding the letters of credit referred to in this Part.

†††††††††††† (2)The trust agreement shall provide that

†††††††††††† (a)the holder shall hold the letters of credit in Canada in trust for the plan;

†††††††††††† (b)the definition "default" in section 2 applies to the agreement;

†††††††††††† (c)the employer shall immediately notify, in writing, the holder and the superintendent and, where the employer is not the administrator of the plan, the administrator of a default;

†††††††††††† (d)where not otherwise notified under paragraph (c), the administrator shall notify, in writing, the holder and the superintendent of a default immediately after becoming aware of it;

†††††††††††† (e)on receipt of the notice referred to in paragraph (c) or (d), the holder shall immediately make a demand for payment of the face amount of all of the letters of credit held in respect of the plan;

††††††††††††† (f)on receipt of a written notice of default from a person other than the employer or the administrator, the holder shall

††††††††††††††††††††† (i)immediately notify, in writing, the employer, the administrator and the superintendent of the notice, and

†††††††††††††††††††† (ii)make a demand for payment of the face amount of all of the letters of credit held in respect of the plan unless the administrator provides a written notice to the holder within 30 days after receipt of the notice that the default has not occurred;

†††††††††††† (g)where a holder makes a demand for payment of a letter of credit held for the plan, it shall notify, in writing, the employer, the administrator and the superintendent that it has made the demand;

†††††††††††† (h)the holder shall immediately notify, in writing, the employer, the administrator and the superintendent where the issuer does not pay the face amount of a letter of credit after a demand for payment has been made;

††††††††††††† (i)the holder shall not make a demand for payment where a letter of credit expires without being renewed, or the face amount is being reduced, in accordance with this Part;

††††††††††††† (j)the administrator shall notify the holder of a circumstance when a letter of credit may expire, or when the face amount of a letter of credit may be reduced, in accordance with this Part; and

†††††††††††† (k)the administrator shall provide the holder with a copy of the statements referred to in paragraph 21(1)(e) and subsection 21(2) and with a copy of the written notice referred to in paragraph 27(a).

Documents etc. to be filed

††††† 21. (1) The administrator shall file the following documents and information with the superintendent for the first plan year of funding of the initial solvency deficiency:

†††††††††††† (a)written notification that the initial solvency deficiency is to be funded in accordance with this Part;

†††††††††††† (b)the actuarial report valuing the plan as of the day on which the initial solvency deficiency emerged;

†††††††††††† (c)a written statement confirming that a resolution of the board of directors of the employer has been passed, if the employer is a corporation, or, if the employer is not a corporation, an approval of the persons who have the authority to direct or authorize the actions of that body, has been given, authorizing the special payment schedule calculated in accordance with this Part;

†††††††††††† (d)a copy of each letter of credit in effect for the plan year;

†††††††††††† (e)a written statement from the administrator that the letters of credit comply with this Part; and

††††††††††††† (f)a copy of the trust agreement set out in section 20 together with the name and address of the holder of the letters of credit.

†††††††††††† (2)For each subsequent plan year of funding, the administrator shall file with the superintendent copies of all subsequent letters of credit that have been obtained by the employer and a written statement, for each letter of credit filed, that it complies with this Part.

Statement to members

††††† 22. Where the administrator provides the written statement under subsection 25(4) of the Act, the administrator shall also provide the following information:

†††††††††††† (a)the amount of the initial solvency deficiency;

†††††††††††† (b)the fact that the deficiency is to be funded in accordance with this Part by equal annual payments over a period not exceeding 10 years; and

†††††††††††† (c)the aggregate face amount of all of the letters of credit that are held by the holder in respect of the plan.

Reduction of the face amount of a letter of credit

††††† 23. (1) The face amount of a letter of credit may be reduced, effective the beginning of a plan year, by

†††††††††††† (a)the amount by which the aggregate amount of payments that the employer has made to the pension fund in the previous plan year exceeds the total of the required special payments and the normal cost of the plan for that year as shown in an actuarial report that was filed with the superintendent for that year in accordance with subsection 16(2) of the Act; or

†††††††††††† (b)the amount by which the aggregate face amount of all of the letters of credit that are held by the holder in respect of the plan exceeds the amount set out in paragraph 16(2)(a) or (b).

†††††††††††† (2)The face amount of the letter of credit shall not be reduced following a default.

New solvency deficiency

††††† 24. Where a solvency deficiency emerges after the day on which the initial solvency deficiency emerged, the new solvency deficiency shall be calculated, for the purposes of paragraph 12(3)(d) of the Pension Benefits Act Regulations, in accordance with a solvency valuation in section 11 of those Regulations and that valuation shall be interpreted as including

†††††††††††† (a)the present value of the special payments referred to in subsection 16(1); and

†††††††††††† (b)the present value of the special payments calculated with respect to an initial unfunded liability that are due in the period that is the greater of

††††††††††††††††††††† (i)the 5 years following the emergence of the new solvency deficiency, and

†††††††††††††††††††† (ii)the period then remaining of the 10 years following the emergence of the initial solvency deficiency.

Failure to pay letter of credit

††††† 25. On receipt of the notice from a holder that an issuer has not paid the face amount of a letter of credit after a demand for payment has been made, the employer shall remit to the pension fund no later than 30 days after the day on which the demand for payment was made, an amount equal to the face amount of that letter of credit.

Occurrence of default

††††† 26. (1) Where a default occurs, the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with Part I from the day on which the initial solvency deficiency emerged, as adjusted to take into account the actuarial gains that were applied under subsection 13(1) of the Pension Benefits Act Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall immediately be remitted to the pension fund.

†††††††††††† (2)Except where a plan is fully terminated, the administrator shall have an actuarial report prepared in which the present value of the special payments referred to in subsection 16(1) shall be zero valuing the plan as of the last day of the plan year in which the default occurs and shall file a copy of the report with the superintendent in accordance with subsection 16(2) of the Act.

†††††††††††† (3)A remaining initial solvency deficiency disclosed by the actuarial report prepared in accordance with subsection (2) shall be calculated by including as an asset an amount remitted to the pension fund in accordance with subsection (1) and the remaining initial solvency deficiency shall be considered to have emerged as of the day on which the initial solvency deficiency emerged.

†††††††††††† (4)The remaining initial solvency deficiency calculated under subsection (3) shall be funded by special payments sufficient to liquidate that initial solvency deficiency by equal annual payments over a period not exceeding 5 years minus the number of years that the plan was funded in accordance with this Part.

Ceasing 10 year funding

††††† 27. A plan may cease to be funded in accordance with this Part, beginning on the first day of a plan year, where

†††††††††††† (a)the administrator gives written notice to the superintendent not later than 6 months after the beginning of that plan year;

†††††††††††† (b)the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with Part I from the day on which the initial solvency deficiency emerged, as adjusted to take into account the actuarial gains that were applied under paragraph 13(1) of the Pension Benefits Act Regulations, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, is remitted to the pension fund at least 30 days before the plan's year end; and

†††††††††††† (c)an actuarial report is prepared in accordance with subsection 26(2) and any remaining initial solvency deficiency is calculated and funded in accordance with subsections 26(3) and (4) as if a default occurred, except that the actuarial report shall be prepared valuing the plan as of the first day of the plan year in which funding ceases.

Repeal

††††† 28. These Regulations are repealed on February 1, 2019.

Commencement

††††† 29. These Regulations are considered to have come into force on January 1, 2007.