New Brunswick regulator updates guidance on statutory discharge of annuity buy-outs
November 13, 2025
The Financial and Consumer Services Commission of New Brunswick (the “Commission”) has issued revised guidance on the statutory discharge of annuity buy-outs.
The Commission issued its original guidance for the statutory discharge of annuity buy-outs in 2022, when certain additional parameters were still under consideration by the province’s Superintendent of Pensions.
The revised guidance reflects recommendations that the Superintendent has since set out for pension administrators.
The two key updates to the Commission’s guidance on the statutory discharge of annuity buy-outs are as follows:
1. Notice of Purchase: A notice of purchase should be sent to the individuals for whom the annuity purchase is made, and it should include:
- A statement that the administrator has purchased a deferred pension, or a pension, as applicable, for the individual from an insurance company.
- A statement that the deferred pension, or pension, as applicable, is the same as what would have been provided under the pension plan had the purchase not been made.
- The date of the purchase.
- The insurance company’s group policy number and the certificate number issued by the insurance company that confirms the purchase.
- The name and contact information of the insurance company.
- A statement that if the administrator is discharged under Section 33 of the Pension Benefits Act, the individual has no further rights or entitlement to any payment from the pension plan, except in certain circumstances where the pension plan is wound up and has a surplus, in which case the notice must state that the individual would be entitled to participate in the allocation of any surplus of the pension plan during the first three years immediately after the date of purchase.
2. Funding Test: On the day after the date of purchase, the solvency ratio of the pension plan should be:
- At least 1.0, if the solvency ratio of the pension plan as set out in the most recently filed actuarial valuation report for the plan before the date of purchase was at least 1.0, or;
- At least equal to the greater of 0.85 and the solvency ratio of the pension plan as set out in the most recently filed actuarial valuation report for the plan before the date of purchase, if the solvency ratio was less than 1.0.
If the solvency ratio test above cannot be met, then the employer should pay into the pension fund the amount required to meet the ratio test within 90 days after the date of purchase.
The Commission said that it anticipates further parameters may be introduced in future regulations.
Click ‘More Information’ below to review the update: https://fcnb.ca/en/news-alerts/revised-guidance-statutory-discharge-of-annuity-buy-outs
