On May 2, 2013, the Liberal government in Ontario released
its proposed budget. While the NDP has not yet
lent the proposed budget support in order to ensure its passage,
the Heenan Blaikie Pensions, Benefits and Compensation Group has
prepared a brief summary on its potential impact on pension law in
Ontario should it ultimately be passed.
Last November, in Carrigan v. Carrigan Estate, the
Court of Appeal overturned the commonly understood interpretation
of the death-benefit entitlement provisions of the Pension
Benefits Act. Previously, the provisions were understood to
mean that where an individual had a legally married spouse, from
whom they were separated but not yet divorced, and a common law
spouse with whom they lived, the common law spouse would be
entitled to receive the death benefits. The Court of Appeal's
reversal of this interpretation potentially disentitles many common
law couples from their spouses' pensions. In this budget, the
government has committed to reviewing this case and its potential
effects in order to determine whether amendments to the
PBA would be appropriate.
In a significant shift from the position taken by the McGuinty
government, this budget proposes that Ontario consult with
interested parties about how Pooled Registered Pension Plans (PRPP)
could be implemented in Ontario. The federal government created
PRPPs in an attempt to provide individuals without a workplace
pension with the ability to participate in larger asset-management
arrangements. PRPPs are currently available only to employees in
federally-regulated sectors, but other provinces are currently
examining how to implement these plans. Under the McGuinty
government, the position of the government had been that Ontario
would not implement these plans, but it seems the current
government does not want to be left behind as other provinces do
implement them. Even if the plans were implemented, participation
would be voluntary.
Previous budgets have also committed the government to
developing a framework for single employer Target Benefit Plans in
collectively bargained workforces. These plans vary employer and
employee contributions with the goal of funding the plan such that
it can pay out a target (but not guaranteed) benefit upon
retirement. This budget reiterates the commitment to making rules
and regulations to allow employers to introduce these plans, but
does not comment on whether these plans may eventually be available
for non-unionized workplaces. At this time, the framework is only
being put in place for unionized workplaces.
Finally, the budget reiterates previous announcements relating
to public sector pensions, but does not add
anything new in this area. It continues a previous commitment to
move public sector pension plans away from fragmented Single
Employer Pension Plans (SEPP) and to move all existing SEPPs
towards a 50% employee contribution ratio over the next five years.
In addition, the budget confirms the government's intention to
put in place a framework and mechanisms for pooled asset management
for public sector pension funds.
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