The financial crisis in Canada, which brought both a decline in the equity markets and interest rate fluctuations, has led to poor individual investment performance in defined contribution plans, and, more markedly, large deficits in defined benefit plans at a time when most plan sponsors are ill equipped to deal with them.

Most jurisdictions in Canada currently require that all defined benefit pension plans must be fully funded over time. If a plan valuation reveals a deficit on an ongoing basis, that deficit must be amortised over fifteen years. If that valuation reveals a deficiency on a "solvency" basis, that is, on the assumption that the pension plan is wound up as at the date of the valuation, that deficiency must be amortised over five years. During times of economic crisis, especially with low interest rates, it can be very difficult for corporations to make these so-called "special payments" to amortise these pension funding deficiencies. Currently, several jurisdictions have enacted or proposed legislation to allow plan sponsors to extend the solvency amortisation period to ten years, if certain conditions, such as consent from the plan membership and disclosure requirements, are fulfilled. Some jurisdictions are contemplating the use of letters of credit to satisfy funding obligations.

In an insolvency, recent amendments to the Bankruptcy and Insolvency Act provide that unpaid pension plan contributions are granted a super-priority charge over all of the assets of the employer where the employer is bankrupt or in receivership proceedings, with certain exceptions. This does not include special payments, including those required to fund a solvency deficiency. In Ontario, the only province with such an entity, the pension payments to plan members may be covered by the Pension Benefits Guarantee Fund, up to a maximum of Can$1,000 per month.