Flexible Use of Excess Pension and Health Funds
New rules allow companies to transfer surplus funds from retiree health accounts to active employee benefits and from defined benefit plans to defined contribution plans. This aims to improve fund management and potentially enhance benefits for current employees, while safeguarding retirees' rights.
Key points
Companies can now use excess funds from retiree health accounts to fund benefits for active employees, potentially improving their current benefits.
Surplus assets from traditional pension plans (defined benefit) can be transferred to defined contribution plans, giving companies more flexibility in managing funds.
Before such transfers, employees and beneficiaries must be notified about the amount transferred and the impact on their benefit rights.
Safeguards are in place to ensure that transfers do not materially reduce benefits or employer costs for at least five years after the transfer.
Status:
Introduced
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