Going-concern funding deficiency (pension)

A buyer of a business with a defined benefit plan can look for this figure in the plan’s filed reports, because the plan must set out the contributions required toward it. It is a separate measure from the solvency deficiency. See what happens to the pension or benefits plan on a sale.

How Ontario treats it

The Pension Benefits Act defines a going concern unfunded liability as one determined in accordance with the prescribed requirements. Regulation 909, s. 4(1), says every pension plan shall set out the obligation of the employer, or of any person or entity required to make contributions on behalf of the employer (and, in a jointly sponsored pension plan, of the members if applicable), to contribute in respect of the normal cost and any going concern unfunded liability and solvency deficiency. Section 3(1) also requires the administrator to file a report when an amendment creates or changes a going concern unfunded liability, subject to the exceptions in s. 3.

What to ask

• The latest filed valuation report and any unfunded liability it discloses.
• The contributions the plan text requires toward it.
• Whether recent plan amendments changed it.