02/18/2010

On December 9, 2009, the Minister of Finance introduced Bill 236 as a first step in pension reform in Ontario.
The Bill moves forward on some of the Expert Commission on Pensions Report recommendations, which arose from the Commission’s review of stakeholder concerns.

Bill 236 addresses divestments, grow-in benefits, limited increases in Superintendent’s powers, notice of plan amendments, phased retirement and a number of other more technical issues. There are three aspects of Bill 236 that are priority concerns for municipal employers because of the significant financial impacts that they may have on the OMERS Plan:

  1. Grow-in Benefits*:  Bill 236 would provide for grow-in beyond partial and full wind-ups to all who are terminated (except for cause), by an employer in the private or public sector. At the same time, it provides MEPPs and JSPPs** with the ability to elect to exclude their plans from grow-in. This is because these types of plans involve both members and employers in benefit and funding decisions and some are public sector plans which are unlikely to wind up, thus making grow-in irrelevant. As the Bill currently stands, the grow-in provisions since they are currently provided for, would automatically require valuation and increase funding costs for MEPPs and JSPPs, thereby adding even more to the increasing funding pressures on members and employers of OMERS.
  2. Transfers of Assets: The provisions in Bill 236 address long-standing concerns by OMERS members relating to the option of consolidating their pension service under one plan. Member consent would either be a requirement or an option, depending on circumstances, for transfer of assets to a successor employer pension plan. Transfers would be based on the value of benefits and there would also be clearer relationships between the transferred members and their prior plan. The provisions of the Bill, as they now stand, should be more flexible to address the specific needs of MEPPs and JSPPs, many of which have multiple employers and former employers which no longer exist.
  3. Phased Retirement:  Bill 236 would allow plans to include phased retirement provisions, to provide extra flexibility for some members. However, provisions in the Bill should provide more flexibility in the formula for phased retirement payments and in allowing plans to determine whether and how to offset amounts paid through a phased retirement benefit.
Status: Currently, Bill 236 has been ordered for Second Reading. After Second Reading debate, the Bill will proceed to Standing Committee. MEPCO will be making a written submission to the Standing Committee on its concerns with Bill 236 provisions.

*These benefits give plan members, whose age plus service equal at least 55, when their plan is wound up, the ability to “grow into” certain benefits they would have attained if they had continued in service and the plan had not been terminated.

** Multi-Employer Pension Plans and Jointly Sponsored Pension Plans.