Ontario Expert Commission on Pensions Releases Report
The Ontario Ministry of Finance has released an extensive report entitled A Fine Balance: Safe Pensions, Affordable Plans, Fair Rules (the “Report”), which makes numerous recommendations for amendments to pension policy and governance in Ontario.
The Report follows an extensive review of Ontario’s occupational pension system by the Ontario Expert Commission on Pensions, which was established in November 2006.
The 222-page Report contains 142 recommendations for reforming Ontario’s pension system. Following is a list of some of the recommendations contained in the Report:
- Establishment of a new government agency that would assume responsibility for collecting and disseminating information about the pension system, for devising new pension strategies and policies, and for working with stakeholders to improve the pension system.
- Investigation by the government of the advantages and disadvantages of expanding the Canada Pension Plan, or creating a comparable provincial plan.
- Review, amend, if necessary, make permanent and extend to all Multi-employer Pension Plans the temporary rules that now permit Specified Ontario Multi-employer Pension Plans to be funded solely on the basis of going concern valuations, rather than solvency valuations.
- Single-employer pension plans (SEPPs) should be funded on the basis of both solvency and going concern valuations but should maintain a security margin of 5% above full funding.
- Surplus remaining in a SEPP when it is wound up should be distributed in accordance with the plan documents, if they are clear. If not clear, the surplus should be distributed as proposed by the sponsor and agreed to by unions or, if no union, by the plan members themselves. Sponsors should be allowed to withdraw surplus from an ongoing plan if it is funded at more than 125%, subject to similar procedures.
- Sponsors should be allowed to reduce or suspend contributions if the plan if funded at 105% or more, but must resume contributions immediately if funding falls below 95%.
- If a defined benefit (“DB”) plan is converted to a defined contribution (“DC”) plan, any surplus should be used first to protect accrued entitlements to DBs and to preserve the plan’s 5% security margin. Unions or, in their absence, plan members, should have an opportunity to approve the new arrangements.
- The level of monthly benefits eligible for protection by the Pension Benefits Guarantee Fund should be raised from $1,000 to $2,500.
- The current regulator, the Financial Services Commission of Ontario (FSCO), should be replaced by a new Ontario Pension Regulator, which would have self-management powers comparable to those of the Ontario Securities Commission.
- The Financial Services Tribunal should be replaced by a new body, the Pension Tribunal of Ontario, which would have exclusive and ultimate jurisdiction over all matters arising out of or incidental to the Pension Benefits Act.
For the full Report, as well as a summary of the recommendations, please visit the link, below.
Ontario Expert Commission on Pensions