July 03, 2018
Partner Mitch Frazer recently spoke to Benefits Canada about the changes made by the Ontario government in 2015 regarding joint pension plans and how it is affecting different organizations’ plans.
The article highlights the Youth Services Bureau of Ottawa and the decisions they had to make facing a pension deficit.
Mitch told Benefits Canada that the amended rules that came into effect in 2017 allowed a jointly sponsored plan to use an alternative method of calculating commuted values for the purpose of a merger. The change ensured any transfer of pension assets didn’t penalize plan members.
“That’s the challenge, because you’ve got surplus and deficits and you’re trying to make sure people’s benefit moves with them exactly as it should,” he said.
Not many organizations have switched from single-employer plans, however Mitch told the publication more were considering a merger.
“Consolidation is a positive trend for the pension industry. It makes it much more cost-efficient to run the plan by having one administrator rather than 10 administrators, and anything that makes it more cost-efficient is more likely to ensure that the recipients can continue in a defined benefit plan much longer,” he said.
You can read more about Torys’ Pensions and Employment Practice by heading to its practice page.