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
27 Oct 2016, Seminar, Toronto, Canada

Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.

1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.