Restriction on Transfer Values – Defined Benefit Plans

OSFI would like to remind plan administrators that transfer values for members are restricted if the solvency ratio of the plan is less than one (subsection 26(4) of the PBSA and section 19 of the PBSR). In accordance with section 9 of the Directives of the Superintendent, if the solvency ratio of a defined benefit plan is less than one, a member’s transfer value shall be calculated by multiplying the pension benefit credit by the solvency ratio of the plan. Any transfer deficiency of the pension benefit credit must be transferred with interest within five years of the initial transfer.

The full value of a member’s pension benefit credit may only be transferred where:

• the value of the transfer deficiency has been remitted to the fund or
• the transfer deficiency for any individual is less than 5% of the Year’s Maximum Pensionable Earnings for that year, provided that the aggregate value of all transfer deficiencies paid since the last valuation date does not exceed 5% of the assets of the plan at that time.