Further clarity required on Ontario’s variable benefits proposal: PIAC

While the Pension Investment Association of Canada is praising Ontario’s 2019 budget proposals, it’s also questioning how the provincial government is planning to implement them.

In a letter to provincial Finance Minister Vic Fedeli, the association noted further clarification is needed around the introduction of variable benefits. “While we are pleased that 50 per cent unlocking will be available to members if they transfer their assets out of their [defined contribution] plan, PIAC encourages the government to also permit unlocking 50 per cent within the DC plan. This approach has already been adopted by Alberta.”

Read: Industry praises budget proposals to allow variable annuities for CAP members

Further, the PIAC is concerned about the so-called all or nothing requirement at the time of transfer for a variable benefits account. “Members should be able to retain part of their balances to obtain a retirement income annuity from their DC plan,” stated the letter. “An approach that allows partial balances to remain in the DC plan provides retirees with more flexibility to optimize the timing and nature of their retirement income, while benefitting from the DC plan’s investment and cost efficiencies.”

The PIAC also commended the province on furthering the target-benefits plan model, which it noted may have an important role in the future of pensions in Ontario. It also said the province should be careful to include single-employer plans in any model enhancements it’s considering to ensure a level playing field.

Regarding electronic communications, the PIAC said it agrees the province should be the default method for communicating pension issues quickly.

Read: Pension and benefits highlights from Ontario’s 2019 budget