Yesterday Bill 120, Securing Pension Benefits Now and for the Future Act, 2010, received royal assent. As discussed in previous posts (see October 22, October 29 and December 6, 2010 posts), Bill 120 made a number of significant changes to the Ontario Pension Benefits Act, including:
- restricting plan amendments that would increase pension benefits while reducing a plan’s funded status;
- permitting certain employers to use letters of credit for up to 15% of a plan’s liabilities;
- allowing employer contribution holidays, subject to certain prescribed requirements, unless the “documents that create and support” the plan or the fund prohibit such holidays;
- permitting the payment of “reasonable” plan administration expenses from the plan fund unless such payment is prohibited or the payment of expenses “is otherwise provided for, under the documents that create and support” the plan or the fund;
- clarifying that surplus may be paid to an employer when it has reached an agreement with two-thirds of the plan members (or a union on behalf of such members) and such percentage of the former members and other entitled persons that the Superintendent considers appropriate;
- providing for arbitration if the Superintendent does not consent to the payment of surplus to the employer and there is no agreement in place within a prescribed period of time after a plan wind-up;
- authorizing defined contribution plans to pay pension benefits from the plan fund; and
- providing for target benefit plans in unionized workplaces.
While most of these changes will come into force on a date to be proclaimed and many are subject to regulations to be prescribed, some provisions do come into force as of royal assent. Most significant for private sector plan sponsors, are certain provisions related to payment of plan expenses from the plan fund and payment of surplus to an employer, which are now in force.
With the passing of Bill 120 and the government’s first stage of pension reform, Bill 236, earlier this year, 2010 can be marked as a year of significant change to Ontario pension legislation. The full impact of such change (and whether it will ease the administration of Ontario registered pension plans), however, remains to be seen.