Ontario Budget Contains Measures To Strengthen Pension System.The Ontario government introduced several measures for pension reform in the budget released on March 26.1 Of importance, we note that the government reiterated2 its proposal to provide temporary solvency funding relief for all Ontario regulated pension plans. Specifically, plan administrators may elect to (i) consolidate any existing solvency payments into a new five-year payment schedule; (ii) defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. , for one year from the valuation date, the start of new going-concern and solvency special payments; and (iii) subject to consent,3 extend the amortization period for new solvency deficiencies to ten years, from five years. These measures would apply to the first scheduled valuation report dated on or after September 30, 2008. If an election is made, active, deferred and retired members must receive an enhanced notice of the plan's funded status and the effect of the election. In addition, if solvency payments are consolidated or extended, all future benefit improvements must be funded over five years on both going-concern and solvency bases. The government also proposed a prohibition on contribution holidays4 for fiscal years "ending in 2010 to 2012." The prohibition applies to all pension plans unless the plan is a designated plan under the Income Tax Act (Canada) or the plan sponsor files an annual actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin cost certificate with the Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. Commission of Ontario that confirms that the plan was in a surplus position at the start of the fiscal year. Other key points include the introduction of amendments to permit the pension plan to offer phased retirement programs and legislation that would expand the Ontario Teachers' Pension Plan The Ontario Teachers' Pension Plan (OTPP), commonly referred to as Teachers', is the organization responsible for administering pensions for public school teachers of Ontario. The OTPP also invests the plan's pension fund. Board's mandate to allow it to provide administrative and investment services to other pension plans and institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. in the public sector. The expansion of the board's mandate is intended to lower administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. and improve investment returns, and is in line with the recommendations made by the Ontario Expert Commission on Pensions. The budget also clarified the scope of the Pension Benefits Guarantee Fund (the PBGF PBGF Pension Benefits Guarantee Funds ).5 The government confirmed that the PBGF's liability is limited to its assets and that it is not required to make grants or loans to the PBGF. The PBGF will undergo its first independent actuarial study to determine its stability and financial status6 and assist with long-term policy development. The government will establish a Pension Reform Advisory Council to consult on specific legislative proposals relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its planned legislative reform. The council will comprise individuals with a wide variety of backgrounds and interests to ensure a balanced approach. We view the budget as a promising step forward since it shows that the government is committed to resolving important pension issues. We expect (and eagerly await) legislation reform in the fall of 2009. Footnotes 1.The budget is available online at www.fin.gov.on.ca/english/budget/ontariobudgets/2009/. 2.These measures were announced on December 16, 2008. 3.The solvency payment schedule would only be extended if no more than one-third of the aggregate of all active, deferred and retired plan members indicate (before the start of payments) that they do not consent. 4.When a defined benefit plan Defined benefit plan A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan is in a surplus position, plan sponsors may use this surplus to fund some or all of their current service costs. This is known as a "contribution holiday." 5.The PBGF provides basic pension benefit protection when a plan is wound up in a deficit position and the employer is unable to fund the deficit. The PBGF is funded through annual premiums levied on plan sponsors. 6.The PBGF had an accounting deficit of $102 million as of March 31, 2008. Its 2008 financial statements are available online at www.fsco.gov.on.ca/ENGLISH/pensions/PBGF-2008.pdf. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Mr Mitch Frazer Torys LLP LLP - Lower Layer Protocol Suite 3000 79 Wellington Street Wellington Street is a name of a street in:
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