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TORONTO--Ontario's pension legislation is overdue for a major revamp that addresses the pressures driving employers away from defined benefit pension plans, a Canadian pension expert says.
The Ontario Expert Commission on Pensions is taking a hard look at the Ontario Pensions Benefits Act, which has not changed substantially since 1988 despite an aging workforce, the repeal of mandatory retirement in the province and the volatility of defined benefit plan costs that has led a number of Canadian employers to switch to defined contribution plans.
The statute "needs updating," said Robert Brown, director of research for the commission, a professor of actuarial science and director of the Institute of Insurance and Pension Research at the University of Waterloo.
The commission also is exploring the role of Ontario's pension guarantee fund, considering whether it is still appropriate in its current format, how well it is funded and what impact the fund has on defined benefit plans in the province, Mr. Brown said at the Assn. of Canadian Pension Management's regional conference in Toronto on May 9th.
Ontario is the only Canadian jurisdiction with a pension guarantee fund.
A critical issue that the commission will address relates to the dispute over who owns plan surpluses, which has been the basis of extensive litigation for employers in Ontario, he said.
Many issues, while critical to the health of defined benefit plans in Ontario, may be outside the commission's jurisdiction, Mr. Brown noted. Any discussion on funding, for example, would be incomplete without mentioning that federal tax laws limit contributions that employers can make to their plans.
"That is one of the issues we are grappling with," he said. "Where is our fence and where would we like it to be?"
The commission will hold public hearings in Toronto Oct. 17-19 to give stakeholders an opportunity to present oral arguments relating to pension issues. The commission will file its report with Ontario Minister of Finance Greg Sorbara in the summer of 2008.