Notably absent from the proposed reforms is any mention of saving Ontario’s defined benefit (DB) pension plans, which was OECP chair Harry Arthurs’ mandate. Markham suggests that the reception of the OECP report led to a wider scope for pension reforms. “One can presume that we’ll see a package that is not just DB-related but also DC-related, because there are DC issues out there,” he adds.
He feels that further PBA reform is required, including removal of the “prudent person” rule, which currently restricts pension plans’ investment strategies with regards to corporations, real estate and asset allocations. According to OMERS’ submission to the OECP, such legislation is archaic, imposing complexities and costs that can undermine investment performance to the detriment of employers and members.
Further changes brought about by the OECP report include an expanded mandate for the Ontario Teachers’ Pension Plan (Teachers’), which would be permitted to provide pension administration and investment services to other public sector pension plans and institutional investors, much like OMERS has done for years. This gives organizations the flexibility to use Teachers’ in a wide range of capacities, from full participant in the Teachers’ fund to partial investor (purchasing units in specific asset classes offered by the fund).
The Ontario government is planning to move forward with Bill 133, the Family Law Statute Amendment Act. Upon passage of the bill, the government will consult with stakeholders on regulatory details, including the calculation of the pension division.
The government also plans to introduce legislative amendments to the PBA that would permit pension plans to offer phased retirement programs.
Furthermore, the budget calls for the Financial Services Commission of Ontario’s (FSCO) powers to be broadened, giving the Superintendent of Financial Institutions the ability to review pension arrangements in restructuring proceedings under the Companies’ Creditors Arrangements Act. FSCO will also hire 25 new employees over the next three years to help increase regulatory oversight.
Legislative amendments will be made to the Succession Law Reform Act to permit beneficiary designations to be made directly within a tax-free savings account, similar to the way beneficiary designations are currently made within registered retirement savings plans.
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