This is my third blog post in a series on target benefit plans.
In the first post, I discussed the basics of target
benefit plans (TBP), also referred to as defined ambition
In the second post, I discussed New Brunswick's
shared risk model, a type of TBP. As discussed in that post, New
Brunswick is the first jurisdiction in Canada to implement a
comprehensive TBP regime as a design option for single and
multi-employer plans and union and non-union workforces. (Target
benefits for multi-employer plans already exist in most
In this post, I will discuss the status of single employer TBPs
across Canada – outside of New Brunswick.
In each of Alberta, British Columbia, Nova Scotia and Ontario,
target benefit provisions have been introduced into the
legislation. However, in each case the legislation is not yet in
force and there are no regulations.
The legislation in Ontario and Nova Scotia will limit target
benefits to workforces where there are collective agreements. It is
unclear why this restriction has been made in the legislation,
given that many collectively bargained workforces already have
access to multi-employer target benefits. One issue that is
frequently raised in this context is governance. This is because
multi-employer target benefit plans are generally governed by a
board of trustees that includes employee representation. While this
may be a hurdle to achieve in the single employer non-union
context, there are certainly options that could be considered. For
example, boards of trustees could be required to have one or two
Another option would be to adopt New Brunswick's approach.
In New Brunswick, shared risk plans can be administered by a
trustee, board of trustees or not for profit corporation. There is
no requirement in the legislation for how boards of trustees must
be constituted. The New Brunswick legislation does provide that
trustees are to act independently of the party that appointed them
and that the sole obligation and fiduciary duty of a trustee is to
carry out the purposes of the shared risk plan.
Quebec introduced target benefit rules that only apply to a
limited sector – pulp and paper. Final regulations were
published in Quebec on November 6, 2013. The Quebec rules are
retroactive to December 31, 2010 to accommodate certain TBPs that
were established effective January 1, 2011.
In Saskatchewan, the regulator takes the position that no
amendments are required to the applicable pension standards
legislation to accommodate target benefit plans. The existing
legislation allows a plan sponsor to limit the contribution levels
to the amount negotiated under a collective agreement. If funds are
insufficient to enable the benefits, benefits can be reduced if
approved by the regulator.
Manitoba and Newfoundland and Labrador have not proposed
legislation to date that would accommodate single employer target
benefit plans. There is no single employer target benefit
legislation for federally registered plans. P.E.I. does not
currently have pension standards legislation in force.
It also worth noting that changes to the Income Tax Act (Canada)
should be made to accommodate the unique nature of target benefit
plans. The ITA is designed to accommodate defined benefit (DB) and
defined contribution (DC) plans and specified multi-employer plans.
TBPs are different than DB and DC plans, although they contain
features of both. For example, consideration should be given to the
pension adjustment structure in the ITA and how it will apply to
The pension system is a voluntary one. Employers should be
provided with choices if they wish to provide a pension to their
employees. For some employers DB may be the right choice and for
others it may be DC. However, there is a big spectrum between DB
and DC and legislative changes need to be made to facilitate other
options along that spectrum. Policy makers should be encouraged to
adopt legislation to facilitate single employer TBPs and other
innovative plan design options.
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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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.
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