The proposals for pension reform are responsive to the calls for urgent reform and balancing the interests of employers and employees. For example the temporary funding relief requires the approval of plan beneficiaries which includes retirees, to extend the solvency payment schedule. All plans, except those that are jointly governed (e.g., multi-employer and jointly sponsored pension plans), would be required to obtain the consent of plan beneficiaries to extend the solvency payment schedule.
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.
Collective bargaining agents would only be able to provide consent for the proportionate share of the active members whom they represent.
Also welcome is the proposal for greater limitations on contribution holidays. In particular, contribution holidays would not be permitted in fiscal years ending in 2010 to 2012 unless:
an actuarial cost certificate, based on an approximation from the last filed report, is filed annually with the Financial Services Commission of Ontario (FSCO) and the cost certificate confirms the plan was in a surplus position at the start of the fiscal year; or the plan is a designated plan under the Income Tax Act (Canada). There is a nod to larger pension funds providing administrative support for smaller funds and mention of something approaching a universal pension plan which CARP has called for consistently as well as a pension summit to involve retirees in pension reform deliberations.
As part of the government’s plan to transform Ontario’s pension system, the Province is establishing a Pension Reform Advisory Council, “representing a broad spectrum of interests and perspectives, to provide practical and focused feedback on specific pension reform proposals”. CARP will be reminding them of our call for a Pension Summit of Finance Ministers at which knowledgeable representatives of retirees will have a material role in the deliberations.
The budget proposals acknowledge the urgent need for pension reform, including rebalancing the interest of employers and employees, protecting pensioners, considering a universal pension plan and involving retirees and other stakeholders in pension reform deliberations. CARP members who have become increasingly anxious about their retirement security will welcome these proposals.