On November 26, 2015, the Ontario government released its 2015 Ontario Economic Outlook and Fiscal Review (Economic Statement). The main features of the Economic Statement as they relate to the retirement income system are summarized below.
ONTARIO RETIREMENT PENSION PLAN (ORPP)
The Ontario government has confirmed that it continues to move forward to implement the ORPP in 2017, while allowing for potential integration of the ORPP with a Canada Pension Plan (CPP) enhancement in the future. For more details regarding the ORPP released earlier this year, please see our August 2015 Blakes Alert: Ontario Government Releases Further Details about the Ontario Retirement Pension Plan. The Economic Statement has also provided that:
- The Ontario government intends to confirm that the ORPP minimum earnings threshold will be aligned with the CPP’s Year’s Basic Exemption of C$3,500 for eligible employees between the ages of 18 and 70
- The initial board of the ORPP Administration Corporation has been appointed
- The Ontario government will release a cost-benefit analysis of the ORPP by the end of 2015
SOLVENCY FUNDING RELIEF FOR DEFINED BENEFIT PLANS
The Economic Statement provides that the Ontario government will initiate “on an expedited basis” a review of the current solvency framework for private-sector sponsors of single-employer defined benefit pension plans with a view to developing reforms.
The Ontario government also plans to extend temporary solvency funding relief measures, which were provided in 2009 and 2012, for an additional three years for valuation reports dated in the three-year period starting on December 31, 2015. In the first valuation report filed in the three-year period, the temporary measures would provide sponsors with the following options:
- Consolidating existing solvency payment schedules into a new, longer five-year payment schedule
- Extending the solvency payment schedule to a maximum of 10 years (from the current maximum of five years) for any new solvency deficiency determined in the valuation report in which relief is taken, subject to the consent of plan beneficiaries
ELIMINATION OF THE “30 PER CENT RULE” FOR PENSION FUND INVESTMENTS
The Ontario government intends to eliminate the “30 per cent rule” for pension fund investments, which restricts Ontario pension funds, subject to certain exceptions, from owning more than 30 per cent of the voting shares of a corporation. The Ontario government intends to post a description of the proposed regulation that would effect this change for consultation in early 2016.
POOLED REGISTERED PENSION PLANS
The Pooled Registered Pension Plans Act, 2015 received royal assent earlier this year, but has not yet been proclaimed into force. The Economic Statement provides that the Ontario government is currently developing regulations.