On January 20, 2015, the Ontario government released proposed new regulations (“proposed Regulations”) under the Pension Benefits Act (“PBA”) for public comment. The proposed Regulations are designed to facilitate the merger of broader public sector (“BPS”) single employer pension plans (“SEPPs”) and jointly-sponsored pensions plans (“JSPPs”), either through (a) a transfer from the SEPPs to an existing JSPP, or (b) conversion of the SEPPs into new JSPPs.
As we previously reported, the Ontario government enacted as yet unproclaimed amendments to the PBA and its regulations allowing certain SEPPs to convert to JSPPs, further to initiatives first announced in the 2013 Budget. The amendments, outlined in Bill 14, the Building Opportunity and Securing Our Future Act (Budget Measures), 2014 (“Bill 14”), permit conversion of BPS SEPPs and other prescribed plans to a JSPP in one of two ways: (1) through a transfer of assets and liabilities from the SEPP to a JSPP, or (2) through an amendment to the SEPP itself. The proposed Regulations provide the supporting framework for these PBA reforms, and address, among other things, the following key issues:
- Notices of Proposed Merger or Conversion to Plan Beneficiaries, Trade Unions and Superintendent
- Consent for Plan Beneficiaries and Trade Unions to Proposed Merger or Conversion
- Requirements for Obtaining Superintendent’s Consent to Proposed Merger Conversion
- Special Payments for SEPP to JSPP Conversions and Circumstances in which Special Payments are Cancelled or Reduced
- Calculation of the Asset Transfer Amount
- Wind up of a JSPP after Plan Merger or Conversion
The government has identified three outstanding issues:
- The level of consent required from plan beneficiaries;
- The degree of protection that SEPP employers must provide for benefits already accrued; and,
- The amount of funding the SEPP employer must provide as a result of the SEPP becoming a JSPP.
Comments from interested stakeholders with respect to these outstanding issues are due by February 27, 2015.