As we mentioned in the
November 2010 issue of Business Law Quarterly, the
Securing Pension Benefits Now and for the Future Act, 2010
(Bill 120) was introduced by the Ontario government on October 29,
2010. Bill 120 contains a number of amendments to the Pension
Benefits Act (Ontario) (PBA). On December 8, 2010, it received
Bill 120, along with the Pension Benefits Amendment Act,
2010 (Bill 236) which received Royal Assent on May 18, 2010,
are legislative responses to the November 2008 Report of the
Ontario Expert Commission on Pensions. Many of the provisions in
the Bills have not yet been proclaimed into law and regulations for
both, which should provide many of the missing details, are still
We expect to publish articles on the future regulations and the
impact of the amendments on plan sponsors and administrators in
upcoming issues of Business Law Quarterly. In this
article, we provide a brief review of the highlights of Bill 120.
Please refer to our
November issue for a review of Bill 236.
1. Payment of Plan Expenses
Bill 120 codifies a pension plan administrator's right to
charge certain fees and expenses to the pension fund. Under Bill
120, the administrator of a pension plan is entitled to be paid
from the pension fund its reasonable fees and expenses for the
administration of the plan and the administration and investment of
the pension fund unless payment to the administrator is
prohibited, or payment of the fees and expenses is otherwise
provided for, under the plan documents or under the PBA and
For plan administrators, this is a step in the right direction
as it codifies the administrator's right to charge certain fees
and expenses to the pension fund. However, it does not explicitly
restrict the plan documents that must be considered to the current
documents. This suggests that historical plan and funding documents
must still be reviewed in order to determine whether an
administrator is prohibited from paying expenses from the pension
2. Contribution Holidays
Bill 120 also codifies an employer's right to take
contribution holidays, subject to prescribed conditions. It is
expected that one of the prescribed conditions will be that the
contribution holiday not reduce the transfer ratio of the plan
below 105 per cent. In addition, an employer may not take
contribution holidays if the plan documents prohibit it. Once
again, as with the payment of plan expenses, Bill 120 does not
explicitly restrict the plan documents that must be considered to
current plan documents.
3. Benefit Improvements
In response to the recent pension funding crisis, Bill 120
amends the PBA to provide that a plan amendment that purports to
improve benefits will be void if the improvement would reduce the
funded status of the plan below the level to be prescribed by
regulation. It is expected that this level will be 85 per cent.
Consistent with other jurisdictions, Bill 120 also provides for the
use of a letter of credit when the pension plan has a solvency
deficiency unless the plan is a multi-employer pension plan or
public sector pension plan that is not a prescribed public sector
4. Surplus Entitlement
Although not an issue for many pension plan sponsors today, the
Ontario government has further attempted to clarify the provisions
regarding surplus entitlement by defining the preconditions to the
distribution of surplus. If the employer can establish entitlement
to surplus under the plan documents, subject to regulatory
requirements, it will be permitted to withdraw surplus. In
addition, the employer will be permitted to withdraw surplus in
accordance with a written agreement entered into with the union, if
any, and two thirds of current members and an undefined
number (likely two thirds) of former members and other persons
entitled to payment under the plan. Bill 120 also introduces a new
arbitration system for the resolution of surplus entitlement
5. Types of Pension Benefits
Two new types of benefits, target benefits and optional
benefits, may be provided to members under Bill 120. Pension
benefits will be considered target benefits if (i) they are not
defined contribution benefits; (ii) the employer's obligation
to contribute to the pension fund is limited to a fixed amount set
out in one or more collective agreements; and (iii) the
administrator has unrestricted authority under the pension plan to
reduce benefits, deferred pensions or accrued pensions. A defined
benefit plan may provide such optional benefits as will be
prescribed by regulation. Target benefits and optional benefits
will not be guaranteed by the Pension Benefits Guarantee Fund.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).