On February 25, 2016, the Ontario government tabled its 2016 budget (Budget), which included a number of provisions affecting registered pension plans and the Ontario Retirement Pension Plan (ORPP). On that same day, the government introduced Bill 173, Jobs for Today and Tomorrow Act (Budget Measures), 2016, which implements certain provisions of the Budget (Bill 173).
- Modernizing the regulation and oversight of financial services and pensions: In November 2015, an expert advisory panel released a preliminary position paper to provide insight into their initial views on reforms to the mandates of the Financial Services Commission of Ontario, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario. The paper proposed significant changes, including the establishment of a new independent regulator. The panel’s final report will be released this spring. The Budget states that necessary legislative or regulatory changes will be identified and pursued as early as possible.
- ORPP: Final elements of the ORPP plan design were announced in January 2016 and the Budget provides that these elements will be outlined in legislation to be introduced in spring 2016. The legislation will focus on employer eligibility, benefit calculations and the compliance and enforcement regime. The ORPP Administration Corporation (ORPP AC) will launch the employer verification and enrolment process in 2017. For further information regarding the design details of the ORPP, refer to our January 2016 Blakes Bulletin: Ontario Government Releases Additional ORPP Design Details and our August 2015 Blakes Alert: Ontario Government Releases Further Details About the Ontario Retirement Pension Plan.
- ORPP AC: The ORPP AC is responsible for administering the ORPP and managing and investing ORPP contributions. In November 2015, the Ontario government appointed the initial board of directors to oversee the ORPP. The Ontario government intends to appoint the full board of directors later this year. Bill 173 contains provisions which, if enacted, would introduce an amendment to the ORPP Administration Corporation Act, 2015, that would enable the ORPP AC to adopt any pre-incorporation contracts made on its behalf within one year of its establishment.
- Collaboration on a national pension solution: The Ontario government re-emphasized that it will continue to work collaboratively with the federal government, provinces and territories to make progress on a Canada Pension Plan enhancement that addresses the needs of future retirees.
- Solvency funding review and temporary solvency funding relief: As discussed in our November 2015 Blakes Bulletin: 2015 Ontario Economic Outlook and Fiscal Review Provisions Affecting the Retirement Income System, the Ontario government has initiated a review of the current solvency funding framework. A stakeholder reference group is being established to ensure that reforms to the existing solvency funding framework are informed by a broad range of stakeholder opinions. A consultation paper outlining possible reform measures will be released in spring 2016. The Ontario government also plans to extend the temporary solvency funding relief measures introduced in 2009 and 2012 for private-sector plan sponsors. Draft regulations are to be posted for consultation in spring 2016.
- Target benefit multi-employer pension plans: In summer 2015, Ontario released a consultation paper on a proposed regulatory framework for target benefit multi-employer pension plans (MEPPs), including a permanent exemption from solvency funding requirements. The Budget provides that the Ontario government will continue to consult on a target benefit MEPP framework, including funding rules.
- Additional legislative measures: The Budget provides that “minor adjustments” are being pursued in the following areas:
- Pension advisory committees (PACs): In fall 2015, draft regulations to facilitate the establishment of PACs were posted for consultation. Bill 173 includes legislative changes to facilitate implementation of PACs. Regulations incorporating stakeholder feedback will be finalized later this year.
- Pooled registered pension plans (PRPPs): Bill 173 includes amendments to the Pooled Registered Pension Plans Act, 2015 to facilitate PRPP harmonization with other jurisdictions. Regulations to support the implementation of PRPPs in the province are under development. The Ontario government will also be developing an appropriate test to determine the comparability for the purposes of the ORPP. Teachers’ Pension Act: Bill 173 includes amendments to the Teachers’ Pension Act to ensure the re-employment rules regarding education-related work that can be pursued by retired teachers who are collecting a pension would prevail over the Pension Benefits Act to the extent of any conflict.
Bill 173 also contains technical amendments to the Pension Benefits Act (Ontario).