Companies in Ontario will be able to defer required pension contributions for six months under temporary pandemic relief measures announced by the Financial Services Regulatory Authority of Ontario (FSRA).
The provincial regulator said Monday that employers will have the option of deferring contributions to certain defined benefit (DB) pension plans to alleviate pressure on their cash flow stemming from the economic fallout of Covid-19.
Eligible employers will be allowed to defer up to six months of pension contributions from October 1 to March 31, 2021.
The deferred contributions must be paid, with interest, by March 31, 2022.
“There will be restrictions on employers that choose to defer contributions to help ensure that funds made available from the contribution deferral are used to maintain business operations,” FSRA said in a release.
Those restrictions include prohibitions on paying dividends, making share buybacks, increasing executive compensation or paying bonuses to executives, among other requirements.
The regulator has also updated its guidance to reflect how it plans to administer the temporary contribution deferral.