{"id":18948,"date":"2020-07-09T08:45:30","date_gmt":"2020-07-09T12:45:30","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/piac-calling-for-changes-to-pfad-calculation-solvency-reserve-accounts-in-nova-scotia-147862"},"modified":"2020-07-09T08:45:30","modified_gmt":"2020-07-09T12:45:30","slug":"piac-calling-for-changes-to-pfad-calculation-solvency-reserve-accounts-in-n-s","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/07\/09\/piac-calling-for-changes-to-pfad-calculation-solvency-reserve-accounts-in-n-s\/","title":{"rendered":"PIAC calling for changes to PfAD calculation, solvency reserve accounts in N.S."},"content":{"rendered":"
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Staff<\/span> | July 9, 2020 <\/p>\n

While the Pension Investment Association of Canada strongly supports Nova Scotia\u2019s recent pension funding changes, it\u2019s calling on the provincial government to tweak the provision for adverse deviation calculation and access to solvency reserve accounts.<\/p>\n

Nova Scotia\u2019s pension funding changes took effect on April 1, reducing solvency funding to 85 per cent, with any shortfalls required to be funded over five years and enhanced going-concern funding to be funded over a period of 10 years, up from 15 years previously.<\/p>\n

The changes also introduced a PfAD calculated by combining a fixed five per cent with a percentage based on the pension plan\u2019s combined target asset allocation for non-fixed income assets.<\/p>\n

Read: N.S. moving forward with new DB pension solvency regime<\/a><\/strong><\/p>\n

In a letter to the Nova Scotia government, the PIAC said it\u2019s in favour of the province\u2019s approach to the PfAD and its broad alignment with other provincial regimes, but it called for further optimization.<\/p>\n

\u201cThe regulations, for example, do not appear to give credit for better alignment of fixed income portfolio duration with liability duration, which is an important consideration for most plan sponsors in their basic portfolio construction,\u201d wrote Simon Fr\u00e9chet, chair of the PIAC, in the letter. \u201cAnd conversely, the regulations appear to give some credit, as if being similar to fixed income, to asset classes which we would not consider particularly well-aligned with liability characteristics (such as venture capital and resource investments).\u201d<\/p>\n

The letter suggested that the Canadian Association of Pension Supervisory Authorities review the variety of approaches and recommend a more standardized measure, given the widespread adoption of PfADs in other provinces.<\/p>\n

The PIAC also expressed support for Nova Scotia\u2019s move to introduce solvency reserve accounts, but noted a concern over the fact that accessing these accounts only appears to be permissible upon plan windup. \u201c[The] PIAC believes that flexible reserve account structures, which allow for access if certain funding thresholds are met, will best encourage sponsors to make use of such accounts and we think that broad take-up is well-aligned with regulatory objectives.\u201d<\/p>\n

Read: PIAC calling for tighter link to asset allocation for PfAD in B.C. solvency funding framework<\/a><\/strong><\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Staff | July 9, 2020 While the Pension Investment Association of Canada strongly supports Nova Scotia\u2019s recent pension funding changes, it\u2019s calling on the provincial government to tweak the provision for adverse deviation calculation and access to solvency...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18948"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=18948"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18948\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=18948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=18948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=18948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}