In response to the decline in defined benefit (DB) pension plans, some Canadian pension jurisdictions (e.g., Québec and Ontario) have revised, or propose to revise, their regulations to eliminate or ease the solvency funding requirements while enforcing a stronger going concern funding requirement. These new funding regimes require additional contributions to be made in respect of a provision for adverse deviations (PfAD) for normal cost and going concern liabilities. The PfAD is expressed as a fixed percentage of the going concern liabilities of a plan calculated using best estimate assumptions, and is included as a part of the plan’s funding target.
