Ontario proposes pension changes

In mid-December last year, the Ontario government introduced legislation to update the Pension Benefits Act. The proposals are the first of what the government says are two sets of legislation, tabled as a follow up to the 2008 report of the Expert Commission on Pensions.

The changes, although they cover a number of issues, will have a limited impact on our Plan. It would seem that the second set of proposals, scheduled for later in 2010, will address broader issues, such as funding, and will be of more interest to jointly sponsored plans such as ours.

The government stated that the proposals will strengthen and modernize the pension system, while clarifying benefit entitlements for plan members and balancing with this the need for benefit security. We will not know the details of the changes, and which ones apply to our type of plan, until detailed regulations are issued sometime later this year.

Access to information

New rules would provide a right for retired members to form pension advisory committees, and require plan administrators to help such committees by providing names and addresses of plan members, and other assistance. This proposal will likely have limited impact on pension plans that have joint governance, as our Plan does.

It is also proposed that all members should have increased access to information about their plan and its funding. Such information could be mailed to retired members, or sent electronically.

Plans are currently required to advise members about changes to the plan's rules only when the changes are "adverse" - certain or likely to result in reduced future benefits. It is proposed that all future changes be subject to this disclosure rule.

Plans are currently required to disclose some basic information about funding on the annual statements that members receive. It is proposed that additional information requirements be spelled out.

This would have little impact on the CAAT Plan and its members, as the Plan already provides most of the information covered in these proposals.

A slow approach

Reaction to the government's package of proposals was mixed. It seems the plan was to cover the topics less likely to be controversial in the first round of changes, while saving some broader, more critical topics for later.

Federal and provincial finance ministers met in Whitehorse in December to discuss the state of pensions in Canada. According to media reports, the meeting produced no action plan, beyond continued consultations and a further meeting in
May. The research paper produced by the federal government for the meeting indicates that Canada's retirement system does well in producing an adequate level of retirement income for a majority of Canadians.

Next time?

Possible topics that were left until the next round of proposed changes in Ontario include adjustments to the Pension Benefits Guarantee Fund (in which the CAAT Plan does not participate), rules for funding and reporting on funding, and proposals to expand pension coverage for those who do not have a workplace plan.

The government stated when it introduced the legislation that these changes are one part of a plan to modernize pension law, together with the temporary solvency funding relief introduced early in 2009, and some proposed changes to simplify the rules for dividing a pension in a marriage breakdown. For our Plan, the principal change we would like to see relates to the solvency funding issue.