Qualifying as a Negotiated Contribution Plan under the PBSA

The Pension Benefits Standards Act, 1985 (PBSA) defines a negotiated contribution plan as a multi-employer pension plan (MEPP) that includes at least one defined benefit provision and under which a participating employer’s contributions are limited to an amount determined in accordance with an agreement entered into by the participating employers or a collective agreement, statute or regulation, and which amount does not vary as a function of the prescribed tests and standards for solvency referred to in subsection 9(1) of the PBSA.

We would like to remind employers and plan administrators that in order to meet the definition of a negotiated contribution plan, a pension plan must be a MEPP as defined by the PBSA. A key feature of the PBSA’s definition of a MEPP is that it excludes a pension plan where more than 95 per cent of the plan members are employed by participating employers who are incorporated and are affiliates within the meaning of the Canada Business Corporations Act. Since such a plan does not qualify as a MEPP under the PBSA, it cannot qualify as a negotiated contribution plan under the PBSA.

For information on the administration of negotiated contribution plans, please see OSFI’s Guidance Note on the Administration of Negotiated Contribution Plans.