Michael Mazzuca's article on Ontario's discussion paper on possible changes to the surplus rules presents the status quo as perfectly satisfactory. Most defined benefit (DB) plan sponsors have understood that implicit in their agreement to fund the plan is the right to access excess funds. In Ontario, thousands of DB plans have been wound up in the last 10 years. Regulatory requirements have helped to facilitate the abandonment of DB plans.

The most offensive legislative attack on plan sponsors has been the notion that any deficit in funding should be paid by the plan sponsor, but any surplus belongs to members. This lose-lose funding risk is unacceptable to many sponsors.

If Ontario allows sponsors to access surplus under reasonable restrictions, it might actually quell the rush to wind-up DB plans and reinstitute these plans as a viable alternative to defined contribution (DC) programs. DC plans cannot achieve the goal of providing an adequate retirement income as effectively as DB plans.

Joe Nunes, President
Actuarial Solutions Inc.
Oakville, Ont.

This firm was ommitted in our Pension & Benefits Consultants Directory, August 2001 issue.

Satanove & Flood Consulting Ltd.
849 W. 63rd Ave., Vancouver, V6P 2H3
Contact: Harry Satanove, partner, (604) 323-9363; fax (604) 323-9314, harry@satanoveflood.com
Services: pension 35%, investment 50%, other 15%
Pension: design, valuations, plan/trust legal document drafting, admin, flex, communication, education, group RRSPs, investment, exec. Benefits: strategic planning, group actuarial services, group insurance, financial review of group insurers.