Following up on its 2012 budget, the Ontario government announced that it will begin consultations on
a new legislative framework for jointly sponsored public sector
pension plans (JSPPs).
As the government indicated previously, their focus is to make
public sector pension plans "more sustainable for members and
more affordable for taxpayers." In addition, the Ontario
government has reaffirmed its desire to ensure JSPPs move towards a
strict 50-50 funding in cases where employee contributions are
currently less than employer contributions.
The Ontario government's proposals focus primarily on
funding issues. Specifically, the government is seeking stakeholder
input on the following proposals:
where there is a new deficit, plans would be required to reduce
future benefits or ancillary benefits before increasing employer
in exceptional circumstances, a limit would be set on the
amount or value of benefit reductions before additional
contribution increases could be considered;
any benefit reductions would involve future benefits only
(i.e., members' accrued benefits and current retirees would
not be affected);
where employee contributions are currently less than employer
contributions, increased employee contributions would also be
available as a tool to reduce pension deficits; and
where plan sponsors cannot agree on benefit reductions through
negotiation, a new, third-party dispute resolution process would be
The Ontario government has indicated that this framework would
be reviewed after the budget is balanced.
The government also reiterated its interest in exploring ways to
enhance the sustainability of single-employer, defined benefit
pension plans in the public sector, and its intention to introduce
legislation this Fall to facilitate the pooling of pension fund
assets, as well as the investment management functions of smaller
broader public sector pension plans.
Ian McSweeney practises exclusively in the
field of pensions and employee benefits and advises clients on
pension plans, supplemental retirement arrangements, deferred
profit sharing plans and other employee and executive compensation
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.
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