Several Canadian pension jurisdictions have revised their funding regulations for defined benefit pension plans in recent years, aiming to eliminate or ease the solvency funding requirement while strengthening the going-concern funding requirement by adding a provision for adverse deviation (PfAD). There are fundamental differences in the PfAD designs among those jurisdictions.
This paper presents a comparative analysis of three known PfAD design alternatives, with a focus on their effectiveness at stabilizing funding for pension plans under a changing-interest-rate environment.