Pension surplus

A seller or buyer of a business with a defined benefit plan can meet this term when someone asks who is entitled to any excess in the fund. Ontario’s Pension Benefits Act defines surplus as the excess of the value of a fund’s assets over the value of the liabilities under the plan, both calculated in the prescribed manner.

Ontario

Section 77.11(1) says that, subject to s.77.11.1, the documents that create and support the plan and fund govern the entitlement of the employer and other persons to payment of surplus, except as otherwise provided under the Act and subject to the restrictions in ss.78 and 79. Section 78(1) says no money that is surplus may be paid out of a pension fund to the employer without the prior consent of the Chief Executive Officer.

Federal

The federal Act defines surplus as the amount, determined in the prescribed manner, by which a plan’s assets exceed its liabilities. Section 9.2(1) says no part of a surplus shown in an actuarial report may be refunded to the employer unless the employer establishes that it is entitled to the surplus under the plan or has a claim to it under that section, the requirements of the regulations are met, and the Superintendent consents to the refund.

What to ask

• Which Act governs the plan.
• What the plan documents say about surplus.
• Whether any surplus payment has been requested or approved.

See what happens to the pension or benefits plan and pension plan wind-up. This entry covers the Ontario and federal Acts only.