Ontario Finance Minister Dwight Duncan has announced proposed changes to the province’s pension system that he says will stabilize workers’ abilities to enjoy a secure retirement.
Duncan explained on Tuesday, Aug. 24 that the proposed reforms build on the first phase of reforms passed by the legislature in May and are based on recommendations from the Expert Commission on Pensions.
According to a ministry press release, the main objectives of the proposed reforms are to:
• strengthen Ontario’s pension funding rules by requiring sustainable funding of promised benefits and tougher funding standards for benefit improvements;
• clarify pension surplus rules and provide a dispute resolution process to allow members, retirees and sponsors to reach agreements on how surplus should be shared on windup; and
• provide a more sustainable Ontario’s Pension Benefits Guarantee Fund (PBGF) by implementing a strategy to build reserves, increase revenues, limit current exposure and reduce risk to taxpayers in the future.
Despite a recommendation by the Expert Commission on Pensions, details to provide pensioners with up to $2,500 a month under the PBGF, Duncan is keeping the payout to $1,000 monthly and is looking to employers to contribute more to the fund. Under the new rules, plan sponsors that currently pay $1 per plan member annually will be required to pay $5 per member, and the maximum fee per plan member in underfunded pension plans will jump from $100 to $300.
Further, he is proposing temporary solvency relief for eligible public sector plan sponsors assuming they meet certain conditions. He also wants to see government reviews of the pension system every five years.
Duncan added that the reforms will be more in-depth and controversial than the previous round of changes, which were mainly technical in nature.
The proposed changes will be introduced in a bill this fall.
More to come.
