The long-awaited report by the Ontario Expert Commission on
Pensions, A Fine Balance: Safe Pensions, Affordable, Fair
Rules, was released on November 20, 2008. The Commission's
mandate was to conduct the first review of Ontario's pension
legislation in over 20 years.
In an effort to reform and reinvigorate Ontario's pension
system, 142 recommendations have been proposed. At the core of
these recommendations are important issues related to pension plan
funding. The recommendations, if implemented, will be a welcome
change. However, there have been similar attempts in recommending
changes to Ontario's pension legislation in the past. Those
past efforts have failed. Until the Ontario provincial government
takes action, pension law in Ontario will remain unchanged. It
remains to be seen whether the Ontario provincial government has
the political appetite to implement any of the recommendations.
Highlights from the recommendations include:
immediate vesting of pension benefits for members once they
join the plan;
extinguishing the requirement to distribute surplus on a
partial plan wind-up;
providing for phased retirement in Ontario;
requirement to maintain a security margin of 5% above
full-funding for single-employer defined benefit pension
permitting plan sponsors to withdraw surplus from an ongoing
plan that is funded at more than 125%, if the plan documents give
the employer the right to surplus, and the plan sponsor gets the
consent of two-thirds of plan members (rather than the 100% consent
enabling plan sponsors to use letters of credit, and possibly
security pledges, to provide security for certain types of unpaid
increasing benefit and contributions limits for registered
pension plans under the Income Tax Act; and
increasing the monthly benefits eligible for protection under
the Pension Benefits Guarantee Fund from $1,000 to $2,500.
Many other recommendations regarding pension plan funding,
regulation and governance, and the process for policy-making are
proposed. The Ontario government is interested in receiving
feedback on the Commission's recommendations by the end of
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