2019 Ontario budget – Pension plan highlights
On April 11, the Ontario Government released its 2019 budget and introduced Bill 100, of which some measures affect pension plans.
In February 2019, the Financial Services Commission of Ontario (FSCO) released its position on the treatment of prepaid contributions, thus limiting their use following the introduction of the new funding rules for pension plans that came into effect on May 1, 2018. In order to clarify the intent of the Pension Benefits Act (PBA), the Ontario government proposes to amend section 55.1 of the PBA to allow these contributions to be used to reduce or suspend contributions for the normal cost of the pension plan.
Currently, pension plans use paper‐based options to communicate with their members, unless a member has consented to digital communications. Ontario is considering streamlining communications with members by allowing electronic communications as the default method. However, members would have the option to continue to receive paper documents if desired.
The PBA was modified last fall to allow plan administrators to accept electronic designations of beneficiaries. The Ontario government proposes to also amend the Insurance Act to also allow insurers to accept electronic designations of beneficiaries.
Target benefit pension plans combine features of both defined benefit and defined contribution pension plans. This type of plan provides a retirement income while maintaining predictable contributions for employers. In the budget, Ontario proposes to establish a legislative framework to allow more multi-employer pension plans to participate in the framework, including the not for profit sector.
FSRA is a new regulatory agency that was created by the government to improve consumer and pension plan beneficiary protections in Ontario. The government intends to launch FSRA in June 2019. This agency will work closely with the various Ontario financial services divisions to assume regulatory functions currently delivered by FSCO and the Deposit Insurance Corporation of Ontario.
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