Canada: Ontario’s Expert Commission On Pensions

Last Updated: September 12 2007

Article by Kathryn Bush, © 2007, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Pension and Employee Benefits, August 2007

In November 2006, the Government of Ontario established a Commission to examine legislation governing the funding of defined benefit pension plans, the rules relating to pension deficits and surpluses, and other issues relating to the security, viability and sustainability of the pension system in Ontario. The Minister of Finance appointed Professor Harry Arthurs as Chair of the Commission (Commissioner) and also an Advisory Panel composed of the author, Ian Markham, Bob Baldwin and Murray Gold to assist the Chair (Advisors). The Commissioner is solely responsible for the final contents of the Commission’s report, and the direction and oversight of the Commission staff.

Those involved, however, agreed the best outcome of the Commission’s work for all stakeholders and the Province of Ontario will be achieved if they can come to an agreement on the conduct of the Commission’s work and recommendations. The Commissioner will, with the assistance of the Advisors, prepare a report to the Minister for delivery in the summer of 2008.

Guiding Principles

The government has provided the following Guiding Principles that the Commission should observe to guide the process:

  • The importance of maintaining and encouraging the system of defined benefit pension plans in Ontario
  • The importance of maintaining the affordability of defined benefit pension plans for both members and sponsors
  • The importance of pension plans in supporting a competitive economy
  • The need to safeguard the security of pension benefits
  • The need to balance the rights and obligations of employers, plan members and pensioners
  • The impact of demographics and the changing nature of the workforce on the provision of employment pensions.

The government has also stated that the Commission should consider the following factors in its deliberations:

  • The need to encourage the appropriate funding of pension plans and acknowledge the connection between surplus and funding. The recent case law and its implications for employers, plan members and pensioners
  • The need to avoid costly litigation regarding pension surplus issues
  • The desirability of facilitating negotiations between employers, plan members and pensioners, and balancing their interests in the surplus withdrawal process
  • The risks and obligations assumed by employers, plan members and pensioners in defined benefit pension plans
  • Developments in other Canadian jurisdictions and the harmonization of pension laws in Canada
  • That recommendations should be practical, affordable and implementable.

Issues To Be Addressed

The government has also stated the following issues are to be addressed in the Report:

  1. Pension Plan Funding

    • The adequacy of regulatory tools, existing reporting rules and timing of required actuarial valuations
    • The rules governing the payment of going concern unfunded liabilities and solvency deficiencies
    • The effect of indexation and other non pre-funded benefits on a plan’s funded status
    • The impact of funding rules on the Pension Benefits Guarantee Fund
    • The funding of multi-employer pension plans
  2. Pension Plan Surplus

    • Surplus rights and deficit obligations
    • Surplus distribution from defined benefit pension plans on full and partial wind-up, and from continuing plans
    • Reductions or suspensions of contributions (contribution holidays) to defined benefit pension plans
  3. Pension Benefits Guarantee Fund

    • Coverage, assessments and allocations from the Fund
    • Its role in providing security of pension benefits to plan members and its continuing viability
  4. Pension Plan Wind-Ups

    • Benefits added by law
    • The determination of a partial plan wind-up
    • Plan wind-ups when an employer is in deficit
    • Unlocated beneficiaries
  5. Pension Plan Splits and Mergers

    • The allocation of plan surpluses and deficits following mergers and divestments
    • Pension asset transfers involving groups of employees
  6. General

    • Pensions as an important policy instrument that support workforce attachment and foster an entrepreneurial economy
    • Any other matters relevant to enhancing the viability of defined benefit pension plans in Ontario.

Commission Discussion Paper

In February 2007, the Commission released a discussion paper. Much of it addresses issues listed in the Commission’s detailed mandate, upon which it must and will make recommendations. A second set of issues has to do with the social and economic environment in which pension plans operate, and the principles the Commission has been asked to follow. The Commission will no doubt have to address those matters in its deliberations and its report, but more by way of establishing a context for its analysis than with a view to making concrete recommendations about them.

A third group of issues is raised for discussion – not because they fall directly within the Commission’s mandate – but because they are known to be of great concern to people who think about pension policy and work with pension plans. Given that these issues are almost certain to be raised in submissions to the Commission, it has tried to frame them in such a way that discussion about them will, in the end, assist the Commission in investigating the concerns at the core of its mandate, as set out above.

As the paper notes, mention of a particular issue in this paper by no means signals the Commission will be dealing with it in its final report, nor does failure to mention an issue imply it will be ignored. The discussion paper, which can be viewed on the Commission’s web site noted at the end of this article, asks over 60 questions for which it is seeking input and invites other questions.

The Commission is also now assigning over 20 research papers and will start meeting with stakeholders in May and June 2007. Public hearings for the presentation of briefs will occur in the fall of 2007 in six cities. There will be three days of hearings in Toronto currently scheduled for October 17, 18 and 19. Persons wishing to participate in these hearings should register with the Commission ahead of time and submit briefs no later than October 15, 2007. In addition, submissions can be continued to be made up to November 21, 2007, for consideration by the Commission.

Plan Sponsor Need And Service Provider Input

Given the breadth of the inquiry and competing agendas, it will be important that input is received from the plan sponsor and service provider communities. One can expect that labour will be well-organized and, because of the centralization of many of their functions, they are often in a better position to respond to the general inquiries than individual plan sponsors and service providers who may not wish to be publicly aligned with specific issues. Organizations such as ACPM, Ontario Bar Association, Canadian Bar Association, Canadian Institute of Actuaries and Canadian Institute of Chartered Accountants may be important voices to raise plan sponsor and service provider concerns.

It is possible to look through the questions raised under consideration and be concerned that some questions, if not properly answered, could lead to inappropriate results. It is likely that reform will result in compromises by both plan sponsors and members, so it will be important to consider all questions in this context.

For example, questions about whether pension plans have been properly managed and whether the appropriate oversight mechanisms exist are questions many sponsors would believe inappropriate on the basis that the problems in current Canadian pensions are not due to a lack of proper management or oversight. Also, questions on indexation of benefits in the context of a struggling defined benefit system seem to require a quick and clear response.

Significant questions are raised about whether greater emphasis should be on jointly sponsored or co-operative plans. It will be important for private plan sponsors to speak to this issue and indicate whether that would solve their concerns. Questions were also raised about joint administration of defined benefit pension plans and whether they would make them more attractive to employers. It is going to be important for the government to hear plan sponsors’ views on that issue.

Questions have also been raised regarding whether more flexibility (that is, room to contribute) under the Income Tax Act (Canada) would help employers. Again, this is an area where plan sponsors are going to have to be clear about what concerns they have about funding defined benefit plans. Funding concerns for many plan sponsors have less to do with the Income Tax Act maximum and more to do about accessing those funds after they have been contributed due to surplus withdraw rules and difficulty with mergers. If this is a view, the government needs to hear it.

There are also questions that seem to query the requirement for increased oversight where "riskier investment strategies" are undertaken. Plan sponsors are going to want to speak to how the prudent person investment rules have been working and whether they wish any further oversight in this regard, and also what effect additional oversight may have on defined benefit plans. Plan sponsors may also like to speak on their view of the Ontario Pension Benefits Guarantee Fund and whether it was necessary to increase the cost of that system to make it financially viable.

Questions also deal with pension plan mergers, splits and restructuring, which many plan sponsor and service providers will have an opinion on since the Transamerica case. To the extent that plan sponsors have had dealings with the Financial Services Tribunal and the courts, it would be useful to let the Commission know whether they think there is efficiency in the Financial Services Tribunal or whether it has developed into a sufficiently legalistic body that it may be more appropriate to go directly to court.

Questions also arise about whether the lack of more harmonization between the governments is problematic to the pension system. While we would all like absolute uniformity, one wonders if plan sponsors ought not to indicate how much difficulty they are having with the lack of uniformity, recognizing that gaining the interprovincial agreement may create further delays in getting any changes in legislation completed.


In the pension community, we have all felt the need for significant pension reform for many years. This Commission is an important opportunity to finally see reform occur. It is vital, however, that plan sponsor and service provider issues and views are heard. It is hoped such views will be presented at the public hearings and in written briefs. The Commission web site at provides further information and updates.

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
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

In association with
Related Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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