On November 20, 2008, the Ontario Expert Commission on Pensions
released its final report, A Fine Balance: Safe Pensions,
Affordable Plans, Fair Rules (Report). The Commission was
appointed in 2006 to review Ontario's occupational pension
system – the first such review in 20 years.
After extensive research and consultation, the Commission has
made 142 recommendations regarding funding, plan
restructuring, plan failure, regulation, governance, and innovation
in plan design and pension policy. Outlined below are some of the
Single-employer pension plans (SEPPs), multi-employer pension
plans (MEPPs) and jointly sponsored pension plans (JSPPs) should
have separate funding rules related to their distinctive
characteristics. Generally, SEPPs should be subject to stricter
rules, and MEPPs and JSPPs should be allowed more flexibility in
The funding approach for SEPPs should include both solvency and
going-concern valuations, and SEPPs would have to maintain a
security margin of 5% above full funding. Deficiencies should be
amortized over five to eight years, and plan sponsors should be
able to use letters of credit, and possibly asset pledges, to
fulfill certain contribution obligations. When an SEPP's
solvency ratio exceeds 105%, contribution holidays should be
permitted; when a continuing plan's funded ratio on a solvency
basis is more than 125%, surplus withdrawals should be
The Ontario government should attempt to persuade the federal
government to reform the federal investment rules, specifically
exempting from the 30% rule larger plans whose members or
representatives have significant participation in plan governance.
If the federal government does not make these changes, the Ontario
government should make its own investment rules.
Plan Restructuring Recommendations
The concept of partial windup should not be eliminated
completely (although it should be limited to cases in which 40% of
active SEPP members are terminated within a two-year period);
however, the Commission recommends immediate vesting for plan
members under all circumstances, expanded grow-in for all
involuntary terminations (only in SEPPs) and the elimination of
surplus distributions on partial windups.
Union bargaining agents, other member representatives or plan
members should have the opportunity to approve plan mergers, splits
or conversions. Where a minimum percentage of plan members or their
bargaining agent agrees in advance to a plan's restructuring,
the regulatory approval process should be expedited.
On plan conversions from defined benefit (DB) to defined
contribution, surplus from the DB plan must be used first for the
5% security margin and then for contribution holidays or other
expenses of the converted plan.
Plan Failure Recommendations
The Superintendent should be able to monitor the pension system
and individual plans more closely. And if there are reasonable
grounds to believe a plan is at risk of failure, the Superintendent
should have the power to order interim valuations, approve
alternative funding arrangements and authorize additional time and
forms of security.
The Ontario government should support recent federal
legislation that gives priority to unpaid current pension service
costs in the event of bankruptcy, and it should initiate
discussions with the federal government concerning extending
similar priority to all special payments to fund deficiencies at
the time of insolvency.
The pension regulation and adjudication system should be
overhauled and should include the introduction of (i) an
independent pension regulator to replace the current Financial
Services Commission of Ontario and to deal exclusively with pension
matters; and (ii) a pension tribunal to replace the current
Financial Services Tribunal and have exclusive and ultimate
jurisdiction over all Pension Benefits Act (PBA)
The PBA should be amended to establish the rights of unions,
other representative organizations and individuals to participate
in regulatory proceedings and to allow the new pension tribunal to
order the plan sponsor or plan to reimburse legal costs for
The regulator should establish benchmarks covering a broad
range of governance issues, including funding, benefits, expense
ratios, administrative costs and service to members and retirees so
that sponsors, administrators and beneficiaries can evaluate their
All plans should be required to establish pension advisory
committees that represent members and retirees, and plan members
should be more involved in overseeing plans.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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