On May 2, 2013, the Ontario government introduced its 2013 budget, titled A Prosperous and Fair Ontario (Budget). Concurrently, the government introduced Bill 65, Prosperous and Fair Ontario Act (Budget Measures), 2013, which is designed to implement some of the proposals set out in the Budget. The Budget aims to make smart investments that will strengthen the economy and help create jobs for youth. It also takes action to eliminate the deficit by 2017-2018.
In the Budget, the Ontario government announced its intention to implement the following pension reforms:
- Review the Ontario Court of Appeal’s decision in Carrigan v. Carrigan Estate1 regarding spousal entitlements, propose related amendments to the Pension Benefits Act (PBA) and, if necessary, amendments to the PBA regulations;
- Clarify and simplify the asset and liability transfer provisions of the PBA for pension plans affected by corporate reorganizations;
- Amend the PBA and PBA regulations to permit asset transfers from employer-sponsored, single-employer pension plans to jointly sponsored pensions plans (JSPPs), and allow employer-sponsored, single-employer pension plans to be converted to JSPPs, if specified conditions are met;
- Introduce "split pension" regulations that will enable public sector plans to permit eligible employees to consolidate pension benefits from past government restructuring;
- Implement a new "funding concerns" test to determine when plans that are exempt from solvency funding requirements are required to file annual valuations;
- Implement a framework for contribution holidays that specifies eligibility criteria and ensures proper disclosure to affected parties;
- Update regulatory requirements to reflect changes in standards issued by professional bodies, including the Canadian Institute of Actuaries and the International Accounting Standards Board;
- Establish content requirements for plan documents and statements for former and retired members;
- Introduce a pooled asset management framework for public sector pension plans, as well as for eligible non-pension investment funds;2
- Consult with interested parties to determine how pooled registered pensions plans should be implemented;3
- Move ahead with regulatory amendments related to target benefits in eligible multi-employer pension plans as announced in 2010; and
- Assuming there are no outstanding tax issues, develop a framework for single-employer target benefit plans, including funding rules, plan governance and permitted benefit improvements.
The Budget also confirms the government’s intention to cooperate with other provincial governments and the federal government in achieving a modest, fully funded enhancement to the Canada Pension Plan.
1 For further information, please refer to Torys’ January 2013 Pension and Employment Bulletin.
2 For further information regarding the pooled asset management framework, please refer to Torys’ November 2012 Pension and Employment Bulletin.
3 For further information on federal PRPPs, please refer to Torys’ December 2011 Pension and Employment Bulletin.
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