Pension measures and economic advisory panel address market uncertainty
McGuinty Government Taking Action In Challenging Times
The McGuinty government is proposing to introduce legislation this spring to provide pension plans with solvency funding relief - a measure designed to protect jobs and families during these rapidly changing economic conditions.
The proposed legislation would allow businesses to spread their solvency payments over a longer period of time, freeing resources for operations, including payroll expenses. It would also increase transparency, ensuring that workers and retirees have clear information about the financial health of their plans, while protecting benefit security in a number of ways.
If approved by the legislature, the government's measures would provide temporary solvency funding relief, through regulations, retroactive to September 30, 2008. If passed, the eight measures would include:
- An extension of solvency amortization periods from five to 10 years with the consent of active members or their collective bargaining agent and retired plan members
- Consolidation of previous funding schedules
- Deferral of catch-up payments to provide one year of cash flow relief
- Permitting the use of actuarial gains to reduce annual cash payments by plan sponsors
- Enhanced notice to active and retired plan members
- Accelerated funding of benefit improvements
- Temporary limitations going-forward on certain contribution holidays
- Adoption of the revised Canadian Institute of Actuaries' Standard of Practice for Pension Commuted Values for solvency valuations
Today, the Minster of Finance is also announcing members of an economic advisory panel from key sectors who have been actively involved in ongoing discussions regarding the rapidly changing economy. The panel will continue to offer ideas, analysis and advice in a new forum on ways to strengthen Ontario's economy.
The members are: Gordon Cheesbrough (Deceased, 2010), Janet Ecker, Tim Hodgson, David Leith, Tito Martins, Michael J. Mueller, Lynn Patterson, Jim Stanford and Douglas Turnbull.
- Ontario regulates 4,100 of the 11,000 defined benefit pension plans in Canada, more than any other jurisdiction.
- Solvency requirements for pension plans ensure that they are able to pay out benefits as promised if the plan terminates. Plans are also required to fund according to going concern rules, and those rules will continue to be enforced.
“By proposing these changes on pensions, we are protecting Ontario jobs and bringing an element of stability in a time of great economic uncertainty. We are proposing action to strengthen and protect the viability of Ontario’s pension system to address this situation and help ensure that the plans can fulfill their requirements and meet the needs of their current members and their retirees.”
“I am pleased that Minister Duncan is responding to the current funding difficulties encountered by Ontario pension plans in the balanced and transparent spirit of my recent report, A Fine Balance.”