The long-awaited report by the Ontario Expert Commission on Pensions, A Fine Balance: Safe Pensions, Affordable, Fair Rules, was released on November 20, 2008. The Commission’s mandate was to conduct the first review of Ontario’s pension legislation in over 20 years.

In an effort to reform and reinvigorate Ontario’s pension system, 142 recommendations have been proposed. At the core of these recommendations are important issues related to pension plan funding. The recommendations, if implemented, will be a welcome change. However, there have been similar attempts in recommending changes to Ontario’s pension legislation in the past. Those past efforts have failed. Until the Ontario provincial government takes action, pension law in Ontario will remain unchanged. It remains to be seen whether the Ontario provincial government has the political appetite to implement any of the recommendations.

Highlights from the recommendations include:

  • immediate vesting of pension benefits for members once they join the plan;
  • extinguishing the requirement to distribute surplus on a partial plan wind-up;
  • providing for phased retirement in Ontario;
  • requirement to maintain a security margin of 5% above full-funding for single-employer defined benefit pension plans;
  • permitting plan sponsors to withdraw surplus from an ongoing plan that is funded at more than 125%, if the plan documents give the employer the right to surplus, and the plan sponsor gets the consent of two-thirds of plan members (rather than the 100% consent currently required);
  • enabling plan sponsors to use letters of credit, and possibly security pledges, to provide security for certain types of unpaid employer contributions;
  • increasing benefit and contributions limits for registered pension plans under the Income Tax Act; and
  • increasing the monthly benefits eligible for protection under the Pension Benefits Guarantee Fund from $1,000 to $2,500.

Many other recommendations regarding pension plan funding, regulation and governance, and the process for policy-making are proposed. The Ontario government is interested in receiving feedback on the Commission’s recommendations by the end of February 2009.

A copy of the complete report is available at: