COVID-19 COVID-19 pandemic brings unpaid leaves into focus
Friday, 29 May 2020 04:34.PM
Morneau Shepell released the May 2020 issue of its monthly newsletter, News & Views, in which the company looks at the following topics:
- COVID-19 pandemic brings unpaid leaves into focus – Several Canadian jurisdictions have introduced new unpaid job-protected leaves of absence for employees who are required to take time off work due to being under quarantine, having to care for family members, personal illness or public health orders. In addition, some existing unpaid statutory leaves may apply to COVID-19-related absences. Employers should be aware of these entitlements and the impact they may have on pension and retirement plans.
- CRA suspends minimum contribution rule for DC pension plans – The Canada Revenue Agency has suspended the minimum contribution rule for defined contribution (DC) pension plans in 2020, which requires DC plans to maintain employer contributions of at least one per cent of pensionable earnings for active members.
- FSRA releases additional COVID-19 update – The Financial Services Regulatory Authority of Ontario (FSRA) published additional information on its response to the COVID-19 pandemic. FSRA reminds defined contribution plan sponsors that, in order to reduce or suspend contributions, they must amend the terms of their pension plans. Other items discussed include the availability extensions to the deadline for filing Pension Benefits Guarantee Fund certificates of assessment, and guidance on interpreting electronic communication and witness signature requirements in light of the COVID-19 pandemic.
- Federal government announces moratorium on solvency payments – The Government of Canada has announced that it will be providing relief to sponsors of federally regulated defined benefit pension plans in the form of a moratorium on solvency payments through the remainder of 2020.
- Tracking the funded status of pension plans as at April 30, 2020 – Morneau Shepell describes the funded status of pension plans since December 31, 2019 based on three typical investment portfolios. A graph shows the changes in the financial position of a typical defined benefit plan since the end of 2019. A table shows the impact of past returns on plan assets and the effect of interest rate changes on solvency liabilities of a medium duration pension plan.
- The impact of pension expense under international accounting as at April 30, 2020 – Morneau Shepell has shown the evolution of the pension expense for a typical defined benefit pension plan. Since the beginning of the year, the pension expense has increased by 2 per cent (for a contributory plan) mainly due to the bad returns on assets (relative to the discount rate).
SOURCE; Morneau Shepell Inc.