Saskatchewan Teachers’ Retirement Plan Welcomes Amended Regulations
This spring, after extensive lobbying efforts by the Saskatchewan Teachers’ Federation, the provincial government passed amendments to The Pension Benefits Regulations, 1993 that updated the regulatory framework under which the STRP operates. These are welcome changes that provide more flexibility in managing the long-term sustainability of the Plan.
The amended regulations do two key things:
- Remove the requirement for the Plan to have a solvency ratio of 90% before providing benefit improvements.
The Plan is funded on a going-concern basis (long-term view). However, a rule requiring the Plan to have a 90% solvency ratio before offering benefit improvements was still in place prior to the changes.
With the removal of this rule, the Federation is now more easily able to provide members with benefit improvements whenever the finances of the Plan allow. The Pension and Benefits Board of Directors is currently undertaking an analysis to determine when this may be possible under the amended regulations.
For years, the STRP has found itself operating in a patchwork of regulations that never quite suited its design. The passing of these amended regulations is a positive step for the Plan, and the Federation appreciates the government’s willingness to work with the STF to improve teacher pensions.
- Allow the Federation to have more time to pay back any future funding deficits as the amortization period was extended from 10 to 15 years.
Under pension law, pension plans like the STRP are required to file valuations at least every three years with the provincial regulator. If the Plan’s liabilities outweigh the assets, the Plan is in deficit and must fund the deficit within a set time period called the amortization period.
An increase in the amortization period from 10 to 15 years gives the Plan more time to pay off future deficits. With a longer period to fund a deficit,
the Plan is under less pressure to alter benefits or contribution levels to fund the deficit.