On November 14, the Ontario Government tabled Bill 177, titled the Stronger, Fairer Ontario Act (Budget Measures). This is the first step toward introducing the legislative measures that were announced when the government released the broad outline of its reform on the funding of defined benefit pension plans in May 2017. Bill 177 provides various amendments to Ontario’s Pension Benefits Act (PBA):
- Funding and governance policies: Requirement to establish a funding policy and governance policy. The content and deadline for submitting these policies to the Superintendent will be prescribed by the regulation.
- Registry for missing beneficiaries: Establishment of an electronic registry by the Superintendent to record missing beneficiaries. If a beneficiary cannot be located, pension plan administrators must notify the Superintendent who, under certain conditions, will record the information in the registry.
- Annuity purchase: For a single employer pension plan, possibility for pension plan administrators to be discharged of their obligations with an annuity purchase. Despite the discharge, former members or retired members for whom the pension or benefit has been purchased retain the same rights with respect to payment of surplus from the pension plan when it winds up as former members and retired members who are entitled to payments under the pension plan as of the date of the wind-up.
- Provision for adverse deviations (PfAD): Addition of the definition of the PfAD, which will be determined by an upcoming regulation, as well as the addition of the possibility of reducing or suspending any required contributions for the PfAD with respect to the normal cost of the pension plan.
- Target benefits: Amendment of the criteria to determine if benefits provided by a pension plan are target benefits, particularly the addition that benefits be provided by a multi-employer pension plan, and the inclusion of the condition that a pension plan cannot provide both defined benefits and target benefits, unless otherwise prescribed. Additionally, for multi-employer pension plans, criteria and steps are implemented for the conversion of benefits offered by the plan to target benefits.
- Pension Benefits Guarantee Fund: Removal of requirements regarding the age and years of employment or membership that members and former members must meet for their benefits to be guaranteed by the Fund. Additionally, increase of the limit beyond which benefits are not guaranteed by the Fund, from $1,000 to $1,500 monthly.
- Variable benefits: Amendments providing that the specified beneficiary receiving variable benefits is entitled to receive statements, the content of which is prescribed, and to transfer amounts out of the variable benefit account. The specified beneficiary can designate a beneficiary with respect to the death benefit on the specified beneficiary’s death.
It should be noted that certain elements mentioned above amend provisions of the PBA that were not in force when Bill 177 was tabled and that many measures of application for these measures, as well as those for the solvency funding reform, are still highly anticipated by plan administrators.
Normandin Beaudry consultants are currently analyzing the scope of the bill and would be happy to discuss with you the impact it may have on your plan.
Please feel free to contact us for additional information.