This is an official version.
Copyright ©2017: Queen's Printer,
Newfoundland and Labrador
Benefits Act Regulations (Amendment)
(Filed June 15, 2017)
Under the authority of section 78 of the Pension Benefits Act, 1997, the Lieutenant-Governor in Council makes the following regulations.
1. The Pension Benefits Act Regulations are amended by adding immediately after section 12 the following:
Corner Brook Pulp and Paper Limited pensions
12.1 (1) In this section
(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) "credit union" means
(i) a credit union to which the Credit Union Act, 2009 applies,
(ii) a cooperative credit society, or
(iii) a credit union incorporated and regulated by or under an Act of Canada or another province;
(c) "issuer" means a bank or credit union that has an acceptable rating by 2 credit rating agencies;
(d) "pension plans" means
(i) the Pension Plan for Unionized Employees of Corner Brook Pulp and Paper Limited, and
(ii) the Pension Plan for Non-Union Salaried Employees of Corner Brook Pulp and Paper Limited;
(e) "trust fund" means the settled property, letters of credit, cash, securities or other property and all proceeds thereof, held by the Corner Brook Pulp and Paper Limited Pension Trust, the beneficiaries of which are the pension plans;
(f) "trustees" means the trustees of the trust fund; and
(g) "value of letter of credit" means the lesser of
(i) the combined solvency deficiency where there is a solvency deficiency in both pension plans and where there is a solvency deficiency in only one pension plan, the solvency deficiency in that pension plan, and
(ii) the face amount of the letter of credit as approved by the superintendent;
(2) Corner Brook Pulp and Paper Limited shall obtain a letter of credit for the pension plans.
(3) The letter of credit 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;
(d) has a face amount that shall not exceed $88,000,000.00; and
(e) provides that
(i) the letter of credit is issued to the trust for the benefit of the pension plans,
(ii) the issuer will pay the face amount of the letter of credit on demand from the trustees without inquiring whether the trustees have a right to make the demand,
(iii) the insolvency, liquidation or bankruptcy of Corner Brook Pulp and Paper Limited shall have no effect on the rights and obligations of the issuer and the trustees, and
(iv) the letter of credit may not be amended during the term of the letter of credit.
(4) Notwithstanding subparagraph (3)(e)(iv), during the term of the letter of credit the face amount may be increased or decreased in accordance with the trust and the approval of the superintendent.
(5) The letter of credit shall stay in force until a deficit no longer exists in the pension plans.
(6) At least 30 days before the expiry date of the term or any renewal term of the letter of credit, Corner Brook Pulp and Paper Limited shall provide written confirmation to the superintendent stating
(a) that the letter of credit has been renewed or replaced;
(b) the name of the issuer;
(c) the face amount; and
(d) the term of the letter of credit.
(7) The solvency assets of the pension plans shall, in addition to the assets referred to in subparagraphs 11(c)(i) to (iv), include the value of the letter of credit which shall be allocated between the pension plans in the manner required by the superintendent.
(8) For the purposes of an actuarial review required under section 5, the value of the letter of credit may be applied to reduce the special payments required under subparagraph 12(3)(d) that have accrued before the review date of the actuarial valuation but have not been remitted to the pension funds of the pension plans.
(9) Where the pension plans are terminated by the superintendent or otherwise, the proceeds of the trust fund shall be allocated between the pension plans in the manner required by the superintendent.
(10) Notwithstanding subsection (9), the proceeds of the trust fund shall only be allocated to one or both of the pension plans if the assets in the pension fund for that plan are less than the value of benefits provided under that pension plan.
(11) Where the proceeds of the trust fund are allocated to one or both of the pensions plans under subsection (9) and surplus assets remain in that plan after the payment of all benefits provided under the pensions plan, the surplus assets shall be paid to Corner Brook Pulp and Paper Limited.
(12) Notwithstanding this section, for the purposes of subparagraph 32(1)(b)(ii) of the Act, the amount of special payments accrued is considered to be the amount by which
(a) the aggregate amount of special payments that would have been remitted to the pension fund
(b) the aggregate amount of special payments made to the pension funds.