Members > Newsletters > Special Edition Summer 2009

Questions and answers

You've been reporting on the province's pension commission for the past two years. Is it going to have any specific effect on this pension plan?

Ontario's Expert Commission on Pensions released its report in November 2008, as discussed in our last newsletter. As has become increasingly clear during the past year, the timing was right for a review of pension law.

The final report included 142 recommendations for improvements to pension law and practice in Ontario. To date, it is too early to say what the ultimate impact might be, and whether there will be any specific changes that will affect our plan.

Following the release of the report, the Ontario government asked for feedback on the proposals. The CAAT Plan made a submission in February of this year, following up on our original 2007 presentation. Here are some of the points we made in that submission.

Valuations – Plans should have a period of 15 years, rather than the current 5, to make up required payments of any funding deficiency. We agree that the standards for valuations should be more transparent, and that jointly sponsored plans such as ours should have to meet funding requirements only on a going concern basis (it is assumed the plan will continue indefinitely). Solvency valuations (which assume that the plan is ending on the day the valuation is conducted) should continue to be conducted, but for information purposes only. This reflects the fact that jointly sponsored plans very rarely face the prospect of winding up. This could be an important change for our plan, and we strongly support the solvency exemption proposal.

Benefit and contribution limits – the Ontario government should encourage the federal government to increase the benefit and contribution limits that apply to registered plans. This would include such things as the limit to which a plan can carry surplus funding, and the maximum pension accrual for individuals.

Plan design – We agree that for individuals not represented by a larger plan, granting the ability to join up and create larger plans, or take advantage of investment services offered by larger plans, are ideas with some merit. (See more on this point.)

As it had promised, the provincial government has introduced legislation that would allow our plan to spread solvency deficiency payments over a longer than normal period of time (10 years instead of 5). Government spokespersons have since indicated that the issues of pension plan governance and funding are being fully considered, in the wake of our hard economic times. It is reasonable to assume some further action may be forthcoming. However, it is too soon to try to predict what that action might include.

July 2009