In its 2026 budget on Thursday, the Ontario government proposed doubling the pension benefits guarantee fund’s monthly guarantee limit from $1,500 to $3,000 for all eligible plan beneficiaries, the largest increase since the PBGF was created in 1980.
It cited a recent review of the PBGF that found the fund had $1.3 billion in net assets as of March 31, 2025. The change is proposed to be effective on or after March 26, 2026.
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“The 2026 review shows a decline in membership and the number of plans as [defined benefit single-employer pension plans] continue to close. In addition, plans are ageing and include a growing proportion of retirees, who are the most vulnerable to a potential employer insolvency. . . . However, the PBGF is in a financially strong position, which can be leveraged to provide additional coverage for plan beneficiaries.”
The government noted it’s also supporting public and private sector employers working to consolidate their pensions with jointly-sponsored pension plans and will be consulting on regulations to assist with consolidation into JSPPs by eliminating PBGF premiums paid by sponsors of DB SEPPs, once plan beneficiaries have consented and while the merger is awaiting regulatory approval.
It also announced the establishment of the Protect Ontario Account Investment Fund, in which the province will invest up to $4 billion to identify and execute on investment opportunities in high-growth industries like artificial intelligence, defence, advanced manufacturing, life sciences, biotechnology and research and development in the critical minerals sector. The fund will crowd in investment from pension funds and other private capital to advance Ontario’s long-term economic and strategic priorities.
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The budget reiterated its previously-announced legislative framework for variable payment life annuities that would permit VPLAs to be offered from pooled registered pension plans, defined contribution pension plans and plans that provide for additional voluntary contributions. The government is targeting Jan.1, 2027, as the date when eligible plans could begin to offer VPLAs.
The government also proposed increased flexibility for plan members to access locked-in pension benefits. Account holders who have reached early retirement age under the terms of their pension plan would be able to fully unlock their funds, as would account holders younger than age 55 whose total locked-in balances are below a prescribed amount — currently $29,840 in 2026 — that would be indexed annually.
The budget also outlined a plan to relieve pension plan administrators of costs related to unlocatable plan members aged 100 and older. Pension plan administrators would be required to conduct additional searches for these unlocatable members, which would be followed by a prescribed waiting period. Administrators could then apply to the Financial Services Regulatory Authority of Ontario for approval to receive a discharge. This initiative would also benefit pension plan members, as plan costs are paid from pension assets, the budget said.
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