Following up on its 2012 budget, the Ontario government announced that it will begin consultations on a new legislative framework for jointly sponsored public sector pension plans (JSPPs).

As the government indicated previously, their focus is to make public sector pension plans "more sustainable for members and more affordable for taxpayers.” In addition, the Ontario government has reaffirmed its desire to ensure JSPPs move towards a strict 50-50 funding in cases where employee contributions are currently less than employer contributions.

The Ontario government’s proposals focus primarily on funding issues. Specifically, the government is seeking stakeholder input on the following proposals:

  • where there is a new deficit, plans would be required to reduce future benefits or ancillary benefits before increasing employer contributions;
  • in exceptional circumstances, a limit would be set on the amount or value of benefit reductions before additional contribution increases could be considered;
  • any benefit reductions would involve future benefits only (i.e., members’ accrued benefits and current retirees would not be affected);
  • where employee contributions are currently less than employer contributions, increased employee contributions would also be available as a tool to reduce pension deficits; and
  • where plan sponsors cannot agree on benefit reductions through negotiation, a new, third-party dispute resolution process would be invoked.

The Ontario government has indicated that this framework would be reviewed after the budget is balanced.

The government also reiterated its interest in exploring ways to enhance the sustainability of single-employer, defined benefit pension plans in the public sector, and its intention to introduce legislation this Fall to facilitate the pooling of pension fund assets, as well as the investment management functions of smaller broader public sector pension plans.