Aug., 2005 – In the 2005 Ontario Budget, the Minister of Finance announced that the ministry would issue a consultation paper which would focus on the funding of jointly-sponsored defined benefit pension plans (JSPs) and potential areas of conflict between the terms of these plans and the Pension Benefit Act (PBA).
The PBA was written with traditional sole sponsorship defined benefit pension plans in mind where the employer is solely responsible for making special payments in respect of a going concern unfunded liability or solvency deficiency. The PBA assumes that plan members are not responsible for making such payments.
With the establishment of JSPs, conflicts may exist between some of the provisions of these plans and the PBA requirements. In order to assess these conflicts, the province is providing this consultation paper which identifies the areas of conflict and proposes solutions. While the focus of this paper is on JSPs, there are a few proposals, regarding transfer deficiencies and actuarial cost methods, which would apply to all defined benefit pension plans. Legislation to amend the PBA to address these issues will be introduced in the fall and, if approved by the legislature, it is expected that the changes will be in effect before year-end. Amendments to the PBA Regulation would also be required.
The proposals set out in this paper provide a possible direction for the amendments. The government is interested in the views of stakeholders and will carefully consider all comments before finalizing the amendments to the PBA and the Regulation.
View the consultation paper at http://www.fin.gov.on.ca/english/consultations/pension/pension.html or a pdf version at http://www.fin.gov.on.ca/english/consultations/pension/pension.pdf