Ontario Budget Highlights New Pension Options

The recently tabled Ontario budget aims to make additional pension options available to workers, namely the Variable Life Benefit (VLB) and target benefit plans. These initiatives are designed to enhance retirement security for Ontarians while addressing the evolving needs of workers and employers.

The Ontario government is actively consulting with the pension sector on the introduction of VLBs. VLBs are also known as Variable Payment Life Annuities (VPLAs) or dynamic pensions, and are a decumulation option that has sparked great interest across Canada over the last few years. Like other jurisdictions, the Ontario government is closely examining this option and is developing its legislative framework.

Dynamic pensions are designed to be paid from pooled registered pension plans, defined contribution pension plans, and plans allowing for additional voluntary contributions. Amounts invested in this plan option would be converted into a pension payable for the rest of the member’s life, with monthly payments that would adjust based on the fund’s investment performance and the mortality experience of its members.

Normandin Beaudry is proud to have participated in the Ontario government’s consultation process on VLBs, contributing its insights and feedback. We believe dynamic pensions represent a significant enhancement to retirement options, providing flexibility to optimize decumulation at retirement and increased financial security for retirees.

The legislative and regulatory framework for target benefit plans was implemented on January 1, 2025. These plans offer a lifetime retirement income at a predictable cost for employers and allow members to continue to participate in the same pension plan even if they change employers. The government will monitor the implementation of the target benefit framework to ensure it meets the needs of all plan members.

Normandin Beaudry remains committed to supporting our clients through these changes, ensuring they are well informed and prepared to leverage the benefits of these new pension options. For more details on how these changes may impact your organization, please contact your Normandin Beaudry consultant or email us.