Canada: 2015 Ontario Budget Provisions Affecting Pensions And Other Retirement Savings Plans

On April 23, 2015, the Ontario government tabled its 2015 budget (Budget), which included a number of pensions and other retirement savings plans-related provisions, as discussed in more detail below. On that same day, the government introduced Bill 91, Building Ontario Up Act (Budget Measures), 2015, which implements certain provisions of the Budget.


The Ontario government is moving forward with its commitment to establish the Ontario Retirement Pension Plan (ORPP) and has indicated that it will introduce legislation that would finalize the details of the plan before January 2017. This legislation will be based on actuarial and legal analysis and ongoing consultation with stakeholders.

Following consultations with stakeholders on key ORPP design questions raised in the consultation paper released in December 2014 (Consultation Paper), the Ontario government has indicated that it will continue to consider the feedback received and further analysis on the three key design issues, as follows:

  • Scope of the Plan: The government has proposed that only individuals who already participate in defined benefit pension plans and target benefit multi-employer pension plans will be exempt from participation in the ORPP. The government received extensive and varied feedback with respect to the scope of the plan and has determined that further analysis and consultation is needed on this issue.
  • Minimum Earnings Threshold: The Consultation Paper requested feedback as to whether the ORPP should mirror the Canada Pension Plan minimum earnings threshold of C$3,500. The Budget noted that further analysis and consultation are also required on this issue.
  • Supporting the Self-Employed: The Income Tax Act (Canada) precludes self-employed individuals from participating in registered pension plans, including the ORPP. The Budget indicates that the government will continue to explore collaboration with the federal government to permit the self-employed to participate in the ORPP.


Bill 91 provides for the establishment of a professional, independent pension organization, the Ontario Retirement Pension Plan Administration Corporation (ORPP AC), and amends other statutes to support the establishment of the ORPP AC. The ORPP AC will have the following key attributes:

  • Responsibility for operationalizing and administering the ORPP and investing plan contributions
  • An independent, professional board of directors composed of nine to 15 members appointed by the Lieutenant Governor in Council
  • A nomination process for the board of directors
  • A transparency and accountability framework, including annual reporting, an annual meeting and strong financial controls
  • Directors and officers will be subject to duties consistent with prudent and responsible pension management.

The Budget provides that the contributions and investment funds will be held in trust for ORPP beneficiaries; separate and apart from general government revenues.

The Budget also indicates that the government is considering additional options for the accountability framework, which could include an Office of the Chief Actuary modelled on the federal Office of the Chief Actuary and an appeals process for reviewing decisions of the ORPP AC.

The legislation will include a requirement for a legislative review within 10 years of coming into force.


The government has proposed establishing an interim board to oversee the ORPP implementation process. If the legislation passes, the government intends to name an interim chair for the ORPP AC in the "coming months." The Budget also notes that the government has already established an ORPP implementation team comprised of professionals with a wide range of expertise and experience.

The government is engaging in a procurement process to identify third-party service-delivery providers for the ORPP. The government's intention is for the costs of administering the ORPP to be borne by the plan.


The Budget indicates that the government intends to provide employers and employees with regular updates on the implementation of the ORPP with the objective of minimizing the administrative costs of implementation. The government also intends to continue to work and consult with stakeholders on the ORPP.


The Budget notes that for the large percentage (65 per cent in 2013) of Ontario workers who do not participate in a workplace pension plan, self-directed retirement savings plans are often the only way to achieve retirement security. In response, the government has been introducing and promoting financial literacy initiatives. In addition, the government has appointed an expert committee to consider more tailored regulation of financial advisers.


The Budget indicates that the government will soon be releasing a consultation paper on a proposed regulatory framework for target benefit multi-employer pension plans. It is anticipated that this framework, once implemented, will replace the time-limited funding regulations currently in place for specified Ontario multi-employer pension plans. Feedback from such consultation will also help inform the subsequent development of a framework for single-employer target benefit plans.


Bill 91 includes amendments to the PBA which permit the payment of variable benefits directly from defined contribution pension plans, together with increased portability and withdrawal options.

The Budget also notes that draft PBA regulations, released for comment on April 21, 2015, introduce a framework for contribution holidays that specifies eligibility conditions and member notice requirements. Specifically, contribution holidays would only be permitted if they do not reduce the plan's transfer ratio below 105 per cent and are not prohibited under the terms of the plan.

The draft regulations also require the acceleration of the funding of certain pension benefit improvements, based on the funded status of the plan.

Stakeholder comments on the draft regulations are due by June 12, 2015.


The Budget indicates that a regulation is being drafted to exempt investments in Ontario infrastructure from the "30% limit," which is a rule that limits the ability of pension plans to hold large voting interests in corporations. Stakeholder feedback will be considered in developing the draft regulation, which will be posted for further comment in the coming months.


Based on stakeholder feedback received in respect of proposed PBA regulations that update reporting requirements and reflect changes to professional accounting standards, the government is considering broadening the scope of the proposed regulations. Possible amendments include:

  • Increasing the threshold at which an auditor's report must be filed for a plan's financial statements to C$10 million in assets (from the current C$3 million)
  • Identifying an alternative to filing audited financial statements for a pension fund
  • Extending the requirement to file an investment information statement to defined contribution plans
  • Easing the requirement for detailed information about individual investments exceeding one per cent of the fair value of the pension fund.


To enhance transparency for plan beneficiaries, regulations will be developed to facilitate the creation of pension advisory committees (PACs). PACs will monitor plan administration, make recommendations to the plan administrator and promote awareness and understanding of the plan.


Further to a review of the Financial Services Commission of Ontario's mandate announced in the 2014 Ontario Economic Outlook and Fiscal Review, the government announced that it will proceed with developing regulations to implement 2010 reforms to the PBA to modernize the powers of the Superintendent of Financial Services.


Earlier this year, the government released a description of proposed regulations that give effect to recent PBA amendments governing voluntary conversions of public sector employer-sponsored single-employer pension plans into jointly sponsored plans. The Budget indicates that stakeholders will have an opportunity to comment on the draft regulations later this year.

Also, the government recently released for consultation proposed criteria for determining whether new jointly sponsored pension plans receive a solvency funding exemption. The government will consider the feedback received before finalizing the criteria.


In 2013, the government established a technical working group to advise on issues relating to the establishment of a new pooled asset management entity for Ontario's broader public sector pension funds. The co-chairs of the working group recently provided their final report to the government. The government is now developing proposed legislation to create a new pooled asset corporation.

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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