Canada: 2013 Ontario Government Budget Provisions Affecting Pensions


The Ontario government stated its intention to:

  • Review the Ontario Court of Appeal's recent ruling regarding spousal entitlements in the case of Carrigan v. Carrigan Estate, propose amendments to the Pension Benefits Act (PBA) and, if necessary, amend the regulations under the PBA. The Carrigan case overturned the commonly understood interpretation of the pre-retirement death benefit provisions under the PBA where the member has both a married spouse, with whom the member is no longer living but where a divorce has not been finalized, and a common law spouse. We will have to see how the government proposes to amend the PBA and whether both the plan administrator and the recipient of the payment will be fully protected from any challenge. We will be discussing this issue at our Seminar later this month.
  • Implement rules that would clarify and simplify the requirements for asset and liability transfers when corporate pension plans are restructured in the future. Hopefully these changes will eliminate the difficulties that arose from various court decisions including Transamerica Life Canada Inc. and Aegon Canada Inc. v. ING Canada.
  • Implement "split pension" regulations (these would permit certain public-sector plans to negotiate agreements to give eligible employees an opportunity to consolidate their pension benefits that relate to past government-initiated restructurings).
  • Amend the regulations under the PBA and, if necessary, propose amendments to the PBA that would permit assets to be transferred from employer-sponsored, single-employer pension plans to jointly sponsored pension plans (JSPPs) and allow employer-sponsored, single-employer pension plans to be converted to JSPPs, if specified conditions are met.
  • Implement a new "funding concerns" test that would determine when plans that are not obliged to satisfy solvency funding requirements are required to file annual valuations. Currently, the PBA regulations require most plans to file an annual valuation if the solvency ratio is below 85%. It is anticipated that the new rule will apply to a small set of plans (including some specific JSPPs and MEPPS) that are currently exempt from the solvency ratio test until June 30, 2013.
  • Implement a framework for contribution holidays that specifies eligibility conditions and ensures affected pension parties are appropriately informed. This follows the proposal announced in 2012 that contribution holidays will be permitted unless prohibited by the plan documents, provided that the transfer ratio remains at a specified level.
  • Update regulatory requirements to reflect appropriate changes to standards issued by professional bodies, such as the Canadian Institute of Actuaries and the International Accounting Standards Board.
  • Prescribe content for plan documents and statements for former and retired members.

Pooled Asset Management

The 2012 Budget announced the government's intention to introduce a pooled asset management framework to oversee investments on behalf of Ontario's public-sector pension funds as well as some non-pension investment funds. The government appointed Bill Morneau as Pension Investment Advisor to consult with interested parties and develop recommendations for consideration. Mr. Morneau's Report was released in the fall of 2012. The 2013 Budget indicates that the government continues to consult on Mr. Morneau's findings. Acknowledging the complexity of this undertaking, the 2013 Budget announces that the government intends to establish a technical working group to advise on the design, governance and transition issues associated with the implementation of a new pooled asset management entity. The working group would report back to the Minister of Finance later this year with a detailed implementation plan. There are significant implementation issues that must be properly considered.

Target Benefit Plans

As we noted previously, Bill 120 defined a Target Benefit Plan as a plan where the employer contributes a fixed amount to the pension fund as specified in one or more collective agreements and all benefits, including accrued benefits, can be reduced if the funding levels are not sufficient. The 2013 Budget confirms that Ontario is moving ahead on regulatory changes related to target benefits in eligible multi-employer pension plans. The government further stated that assuming outstanding federal tax issues will be resolved and, in consultation with interested parties, it will also develop a framework for single-employer, target-benefit plans, including funding rules, plan governance, the timing of necessary benefit reductions, permitted benefit improvements, and notice to members and retired members.

Pooled Registered Pension Plans (PRPPs)

Ontario offered new support for PRPPs as it announced that they will be consulting with interested parties to determine how PRPPs should be implemented, before introducing legislation. It will be important to ensure, for example, that members are adequately protected and low-cost objectives are met.

Canada Pension Plan (CPP) Enhancement

The 2013 Budget materials note that Ontario continues "to advocate for a modest enhancement to the CPP". No details are provided.


Jointly Sponsored Pension Plans (JSPPs)

After extensive consultations with each of the four JSPPs consolidated in the Province's financial statements, the sponsors have signed agreements with the government that meet its policy objectives. These agreements freeze contribution rates until the deficit is eliminated in 2017-18 and eliminate the need for legislation.

The agreements require reductions in future benefits to address new funding shortfalls. Any reductions in future benefits will help mitigate associated growth in pension expense and allow the government to continue to direct funds towards public services for people who rely on them and to eliminate the deficit.

Single-Employer Pension Plans (SEPPs) – Particularly University and Electricity Sectors

Universities. In May 2011, the government provided temporary solvency funding relief to public-sector SEPPs. In exchange for this relief, these SEPPs were expected to negotiate plan changes that would improve sustainability and affordability over the long term. Unless SEPPs can demonstrate progress toward this objective, additional solvency funding relief would be denied.

The 2013 Budget papers state that the government's temporary solvency funding relief regime has been successful. Since the announcement of the regime, 17 plans have been granted relief – 15 of them in the university sector.

The 2012 Budget announced that the government would consider additional tools to enhance the sustainability and affordability of public-sector SEPPs, including measures to encourage equal cost- and risk-sharing between employers and plan members.

The 2013 Budget states that the government remains committed to ensuring these SEPPs move to equal cost-sharing for ongoing contributions within five years and exploring opportunities to support joint sponsorship as the model for pension plan governance and funding in Ontario's public sector. To help realize efficiencies in plan administration and support joint sponsorship in the public sector, the government also intends to develop a framework that would, if specified conditions are met, permit the transfer of assets from SEPPs to JSPPs and allow SEPPs to be converted to JSPPs.

The government will also consider regulatory amendments that provide additional relief from solvency funding obligations, for public-sector SEPPs that have taken action to put their plan on a sustainable track, including movement to equal cost-sharing for ongoing contributions.

Electricity Sector. As announced in the 2012 Budget, the government is moving forward with proposed legislative amendments to eliminate barriers to the creation of new JSPPs in the electricity sector.

The government remains committed to engaging with both employer and labour representatives on the challenges facing electricity-sector plans. To that end, the government intends to establish and chair a working group composed of employer and employee representatives to promote a common understanding of the pension challenges in the electricity sector and move towards a more sustainable framework.

The government will also explore whether further legislative amendments may be necessary to transform these plans.

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

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
27 Oct 2016, Seminar, Toronto, Canada

Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.

1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.