Ontario government providing solvency funding relief for pensions
The McGuinty government will seek the approval of the legislature to provide temporary solvency funding relief for plans affected by the 2008 financial market turmoil and will take steps to ensure transparency and security of pension benefits. Amendments to the regulation under the Pension Benefits Act would also be required.
This proposed temporary solvency relief is the latest measure taken by the McGuinty government to strengthen and protect the short-term viability of Ontario's pension system since the November 20, 2008, release of the Report of the Expert Commission on Pensions. At that time, the McGuinty government undertook to increase the capacity of the Financial Services Commission of Ontario (FSCO), the pension regulator, so as to better ensure the security of pensions. It will also continue to seek focused feedback on the report from all stakeholders, with a written comment period ending February 27, 2009.
Building on the solvency relief provided for certain multi-employer pension plans in 2007, the government would allow other plans to extend new solvency amortization periods from five to 10 years. Access to solvency extensions for plans that are not jointly governed would be tied to the consent of active members or their collective bargaining agents and retired plan members.
The government will seek approval to make adjustments to help relieve funding pressures for all plans:
- The consolidation of previous funding schedules
- One year deferral of the start of catch-up payments required on the filing of valuation reports until the beginning of the next fiscal year, in the same manner as jointly sponsored pension plans
- Permitting greater flexibility in the use of actuarial gains to reduce annual cash payments by plan sponsors
- Adopting the revised Canadian Institute of Actuaries' Standard of Practice for Determining Pension Commuted Valuesfor solvency valuations
Protecting benefit security and promoting transparency
To ensure that the need for transparency and benefit security is taken into account, further measures are also being considered:
- Enhanced notice to active and retired plan members
- Accelerated funding of benefit improvements
- Temporary limitations going-forward on contribution holidays where the plan actuary indicates the plan is no longer in a surplus position