Local pension plans have warmly greeted the second phase of pension reform in Ontario, Canada, through a bill which contains provisions such as restrictions on benefit improvements where amendments will compromise a plan’s funded position. Healthcare of Ontario Pension Plan’s chief executive, John Crocker, says the government should be applauded for its commitment to following through with pension reform.
Bill 120, the Securing Pension Benefits Now and for the Future Act, 2010, was introduced into the legislature for the first reading on October 19, and lays the groundwork to implement many of the proposals outlined by the government in August.
According to Towers Watson, Bill 120 contains provisions that will restrict plan amendments to implement benefit improvements where the amendment would compromise the plan’s funded position.
There is also a solvency exemption in the bill, which identifies a class of jointly sponsored pension plans – those that were JSPPs at August 24, 2010 – and provides that, after regulated regulations are published, those plans will no longer be required to make payments in respect of any solvency deficiency.
“The change relating to solvency funding for large, jointly sponsored pension plans will help plans like HOOPP focus on their critical mission – successfully delivering pensions to members.”
According to Towers Watson many of sections of Bill 120 will come into force on a future date, but several significant provisions will come into force when the bill receives Royal Assent, including those relating to surplus entitlement. PBGF benefit exclusions, and payment of expenses.
There are also a number of other items that will need to be enacted through regulations, such as restrictions on smoothing methods in valuing plan assets and liabilities, and adopting recent updates to the federal investment rules removing quantitative limits on resource and real property investments.
In a separate communication released on October 19, the Finance Minister, Dwight Duncan, also said Ontario plans to release a discussion paper outlining the province’s position on proposals to reform the Canada Pension Plan.