Canada: Ontario Government Committed To Improving Pensions Through Extensive And Innovative Measures

"The 21st century workforce needs a modern retirement income system, but Ontario and Canada have a 20th century system in place. That is why Ontario is taking a leadership role in addressing this pressing issue."

On May 1st, the Ontario government presented its Budget for 2014 (the Budget). Chapter IV "Strengthening Retirement Security in Ontario" makes it clear that pensions are a government priority and perhaps even an election issue.

In this Budget, Ontario has taken a leadership role in proposing some innovative and thoughtful solutions to address the ongoing problems of pension adequacy and coverage. Public understanding of the importance of a sound retirement system is increasing. The government appears to appreciate the importance of this issue to the electorate, as well as the broader policy issues.

The Budget notes that: (i) the Canada Pension Plan (CPP) is fundamental to the retirement income security of all Canadians, but current benefit levels are too low to meet the needs of "middle income earners"; (ii) a significant portion of today's workers are not saving enough to maintain their standard of living in retirement; and (iii) unless action is taken, a significant portion of today's workers will face a decline in their standard of living in retirement.

The Budget identifies the following contributing factors: no access to a workplace pension plan, inadequacy of voluntary savings, high investment management fees, and longer life spans. Ontario is proposing a wide array of measures to address the "retirement savings gap", including a new made-in-Ontario pension plan to complement CPP. This proposed Ontario pension solution has garnered the attention of several other provinces, including Prince Edward Island, Alberta, Manitoba and British Columbia, who now have representatives on the working group. We examine, below, some of the Budget's key pension proposals.

Expanding Public Pensions – A New Ontario Pension Plan

The Ontario government has long advocated for CPP enhancement. In light of the federal government's lack of support for CPP reform at this time, Ontario has decided to move forward on its own with a new mandatory provincial pension plan – the Ontario Retirement Pension Plan (ORPP). According to the Budget, the ORPP, a defined benefit (DB) type plan, would combine with CPP to provide greater replacement income post-retirement and would include the following design features:

  • Pooling longevity and investment risk;
  • Benefits indexed to inflation;
  • Equal contributions to be shared between employers and employees, subject to a maximum of 1.9% each;
  • Plan administration and investment by an agency at arm's length from the government; and
  • A reduced burden on lower income workers (i.e., earnings below a certain threshold would be exempt from contributions).

Although participation in the ORPP is said to be mandatory, the Budget indicates that there will be exemptions for workers who already participate in a "comparable" workplace pension plan. The Budget does not elaborate on what is meant by "comparable". Would this mean DB plans only? Or defined contribution plans too?

While the government has touted the ORPP as a made-in-Ontario solution, it has indicated a willingness to work with other provinces regarding potential expansion. The Budget also indicates an interest in working with the federal government to ensure a seamless implementation.

Subject to consultations with employers and employees, the Budget forecasts an implementation date in 2017, with contributions to be phased in over two years. Technical details would be released in advance of any legislation.

Defined Benefit Plans

Funding Issues

The government reiterated its intention to introduce regulations implementing previously announced reform measures, including limits on contribution holidays and accelerated funding of benefit improvements in underfunded pension plans. There will also be consultation on other funding rules to support the long term sustainability of DB pension plans. In addition, the government intends to extend the exemption of multi-employer pension plans and jointly sponsored pension plans (JSPP) from solvency funding requirements so that it can consult on the appropriate test for all non-solvency funded pension plans, including target benefit plans (TBP).

Asset Pooling and JSPPs

The Budget confirms the Government's commitment to proceed with regulations affecting DB plans in two important areas: (i) to facilitate pooling of the assets of pension plans in the broader public sector for investment purposes; and (ii) to enable conversions of single employer pension plans (SEPP) to JSPPs, including via transfers of benefits from SEPPs to existing JSPPs.

  • Asset Pooling: The government intends to introduce legislation in the spring of 2015 to enable the establishment of a new asset pooling entity, which would operate at arm's length from the government. The Workplace Safety and Insurance Board and Ontario Pension Board will act as the initial participants in this new pooling entity, with others entitled to participate on a voluntary basis.
  • JSPP Conversions: The government will amend the Ontario Pension Benefits Act (PBA) to create the regulatory authority to prescribe conversion requirements. The PBA amendments would require:
    • The same pension be provided to retirees and the equivalent value to employees upon conversion;
    • Notice be provided to all beneficiaries and unions;
    • Consent of beneficiaries be obtained prior to conversion; and
    • Approval of the Superintendent be obtained.

A transfer of assets and liabilities from existing SEPPs to existing JSPPs would appear to be considered a conversion subject to these rules.

The Budget also notes that new JSPPs will not necessarily be exempt from solvency funding requirements (as current JSPPS). For new single employer JSPPs, consideration will be given to whether sufficient protections are in place for members and whether the plan can be expected to be sustainable.

Target Benefits

The Budget reiterates a prior budget announcement regarding consultations on a regulatory framework for multi-employer TBPs, which would consider eligibility conditions, funding rules and governance requirements. It further provides that such consultations would help to subsequently develop an expanded TBP framework for SEPPs. There is no timeline provided in the Budget regarding TBPs on the proposed or expanded basis. It appears that while Ontario agrees with the federal government that TBPs would be a good concept to adopt, they are not as far advanced in the development of a TBP framework.


Recognizing the need for a "range of tools" when addressing retirement security, the government indicated that it will continue to proceed with pooled registered pension plans (PRPP). Based on earlier consultations, the Budget announces the following design features:

  • Voluntary participation and contributions by employers;
  • Automatic enrolment of employees where an employer chooses to offer a PRPP, with an option to opt out; and
  • Low cost to plan members.

This design would appear to follow the federal model for PRPPs, and be targeted as a potential solution for the self-employed.

The Budget also recognized the value of a framework that is "harmonized" with other jurisdictions, as it would help to create a "coordinated approach to administration and regulation across the country." Thus far, PRPP legislation has been implemented by the federal government for federally regulated industries and also as voluntary retirement savings plans in Quebec. The government intends to introduce PRPP legislation this fall.

Self-Directed Retirement Savings

Recognizing individuals' reliance on financial advisers for retirement savings and investment decisions, the government will appoint an expert committee to investigate a possible regulatory framework for financial advisers, including financial planners.

Implications for Ontario Employers and Plan Administrators

While one can debate the efficacy of the Ontario government's choices – and perhaps the pursuit of both the ORPP and PRPP models in particular – the Budget has made it clear that, unlike some of the recent pundits commenting on the federal government's TBP announcement, Ontario does not view the pension debate as an "either or" proposition. The Ontario government appears to have recognized that in order to provide greater pension security, it is preferable to offer employers and employees a number of options, including government sponsored programs like the ORPP and new plan designs like TBPs.

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.

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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

    By clicking Register you state you have read and agree to our Terms and Conditions