Last week, the Ontario and federal governments released their
budgets for 2012. While the Ontario budget, Strong Action for
Ontario Budget), included numerous reforms that will impact
private sector pension plans, the same could not be said for the
federal Jobs Growth and Long‐Term Prosperity:
Economic Action Plan 2012 (
Federal Budget). Employers in Ontario offering private pension
plans should examine the need to change their current pension
arrangements, while federally‐regulated employers
offering similar types of arrangements can rest easy (at least for
Confirming Ontario Reforms
The Ontario Budget proposes to implement various reforms to the
Pension Benefits Act (Ontario) (PBA) that were initially
introduced in 2010, but are not yet in force. Click here for
Bill 236 and
Bill 120 reforms, announced in 2010. None of the proposed
changes are new or surprising, but it is worthwhile to review them
since it has been two years since they were first announced.
As of July 1, 2012, the Ontario government intends to make
effective the following changes to the PBA:
immediate vesting of pension benefits;
elimination of future partial wind ups;
grow‐in benefits available to all plan members whose
employment is terminated (except if a member's employment is
terminated as a result of wilful misconduct, disobedience or wilful
neglect of duty); and
the ability for multi‐employer and jointly sponsored
pension plans to opt out of growin benefits.
In addition, the Ontario government announced its intention to
introduce long‐awaited regulations to the PBA this year,
some as early as this spring, which will:
clarify surplus rules;
implement many of the provisions for planto‐ plan
implement provisions that specify the rights and
responsibilities of "retired members";
set out a "funding concerns" test for defined benefit
plans not required to fund on a solvency basis;
deal with eligibility conditions for sponsors taking
"contribution holidays" and accelerated funding of
benefit improvements; and
permit employers to use irrevocable letters of credit to fund
up to 15% of solvency liabilities of defined benefit pension plans
in certain circumstances.
Federal Budget Proposals
The Federal Budget includes very little on changes to the
federal Pension Benefits Standards Act, 1985 (PBSA), other
than a statement that the federal government will introduce
technical amendments to strengthen the PBSA.
What the Federal Budget does focus on in terms of
federally‐regulated pension plans is pooled registered
pension plans (PRPPs) and its intention to move forward with
implementation. However, in order for PRPPs to be available for all
Canadians, provinces must introduce their own legislation. Ontario
has already expressed concerns over the PRPP model as currently
proposed by the federal government.
What does this mean for you?
If you are an Ontario employer that provides a pension plan to
your employees, you should review your plan terms to determine
whether amendments are needed to immediately vest plan members,
delete partial wind up provisions and provide for grow‐in
If you are a federally‐regulated employer that has a
pension plan, stay tuned for future amendments to the PBSA that may
affect your plan. You may also wish to re‐evaluate your
current retirement arrangements as the implementation of PRPPs may
soon be on the horizon.
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