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Regulations to allow the use of letters of credit to secure pension fund solvency deficiencies
Vancouver (21 July 2008) – British Columbia has revised regulations under its Pension Benefits Standards Act to allow the use of letters of credit to secure pension fund solvency deficiencies, and to exempt multi-employer plans from certain solvency requirements.
The revisions to the Regulations permit the use of letters of credit to fund solvency deficiencies. To qualify, a letter of credit must be: irrevocable and unconditional, issued in Canadian currency by a bank or credit union that is not affiliated with the employer, and made out to the benefit of a fund holder in trust for depositing into the pension fund.
Other provinces to introduce letters of credit for funding purposes include Alberta and Quebec, and letters of credit are also permitted for federally registered plans.