Letters of credit (L/Cs) will soon help to strengthen pension legislation in Manitoba as the Canadian province works to improve the security of pension plans by providing more funding options for employers, particularly during tough economic times.

Labour and immigration minister, Jennifer Howard, announced the new legislation earlier this month.

Guarantees

Allowing L/Cs to be used to guarantee funds to cover promised benefits to employees is one of two tools soon to be available for employers running pension schemes in the province.

During an economic downturn, L/Cs would allow employers to meet pension plan funding requirements without having to resort to scarce operating funds, Howard said when she announced the new law.

Promised benefits

The second measure in the new legislation is the introduction of stiffer penalties for the late filing of information used by the province to monitor pension plans.

Such monitoring is meant to help identify plans that require changes to deliver the promised benefits.

The new legislation is effective as of 1 January 2012.

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