The Pension Investment Association of Canada(PIAC)asked the Ontario Expert Commission on Pensions to address risk asymmetry in the rules regarding surplus entitlement along with seven other recommendations at public hearings in Toronto earlier today.

It said that the pivotal Supreme Court of Canada ruling in the Monsanto case exacerbated the asymmetrical sharing of pension risk between employer and employee groups.

PIAC also recommends that the commission take steps to ease solvency funding requirements by exempting all public sector plans from those requirements due to their low probability of default; providing non-public sector plan sponsors the flexibility to use letters of credit; and researching the feasibility of allowing non-public sector pension plans to have reduced solvency funding requirements based on their credit worthiness.

The organization added that the province should facilitate the opportunity for plan sponsors to enhance the funded position of the plans when plan sponsors are able to do so by encouraging the federal government to amend the Income Tax Act to allow plan sponsors to make contributions beyond the current 110% limit; and allowing plan sponsors to earmark contingency reserves to fund pension plans, where plan sponsors would have the clear entitlement to reclaim funds not required to fund pension benefits.

PIAC’s five other recommendations are: hold pension investments to the standard of a prudent person and eliminate all quantitative limits on investing; clarify the rules In the case of a merger, split, restructuring or partial wind-up to provide that only liabilities are required to be transferred and not the surplus; harmonize pension law across Canada; establish one regulatory system for pensions with one set of rules; and disband the Pension Benefits Guarantee Fund.

The hearings will continue in Toronto on tomorrow and Friday and Tuesday and Wednesday of next week before moving to Kingston the following week.

For more information regarding the public hearings, click here.

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