© Copyright 2000 Rogers Media. The following article first appeared in the April 2001 edition of BENEFITS CANADA magazine.

E-Poll

Should plan members be entitled to a portion of their pension plan surplus?

This month's E-poll tackled the question of whether plan members should be entitled to a portion of their pension plan surplus. The majority of respondents (58%) say yes, while 13% say no. Almost one-third (29%) say plan members should be entitled to a portion of their pension surplus in certain circumstances (see "Sharing surplus," left).

The Hospitals of Ontario Pension Plan (HOOPP) is one plan where entitlement to surplus is spelled out in the original plan text. HOOPP has financial risk sharing between employers--the hospitals--and active members whereby the amount employers contribute to the plan is defined as a percentage of what plan members contribute.

"If there is surplus in the plan, the board of trustees has responsibility to consider any benefit improvements that could be provided to members out of the surplus," says Laurie Hutchinson, senior vice-president, product management and development with HOOPP in Toronto. "And if the surplus is large enough, they are to consider the possibility of both benefit improvements and/or reduction in contribution rates."

HOOPP surveyed its plan membership, employers and pensioners last year and asked them specifically about surplus entitlement. "All three groups agreed that any financial rewards are shared by active members, employers and pensioners," says Hutchinson. "We're equipped now in terms of making decisions about surplus [because we polled our membership] and armed with that we will be developing a surplus management strategy this year."

Hutchinson notes that surplus doesn't necessarily have to be distributed. In HOOPP's survey of its membership, respondents felt strongly about the idea of having a rainy day fund to protect the security of the plan. "Yes, it's okay to use surplus to lower the price, you can use surplus to improve benefits but you can also keep it in the plan as a safety net," she says. "And our members have told us that's important."

In Ontario, a divisional court decision in May 2000 limited the ability of employers and employees to negotiate surplus sharing arrangements. Employers must now demonstrate that the documents that created the pension plan clearly entitle them to pension surplus. Many plans, particularly older ones, do not contain such provisions. The Ontario provincial government will hold public consultations this year on new pension surplus sharing rules.

The Romanow Commission has released its final report on the future of healthcare in Canada.

For Commissioner Romanow's recommendations, click here.

Click here for Senator Michael Kirby's report, "The Health of Canadians – The Federal Role: Recommendations for Reform."