Regulation - LGIC
Enhancing the Sustainability of the Pension Benefits Guarantee Fund
Regulation Number(s):
ONTARIO REGULATION 466/11
Instrument Type:
Regulation - LGIC
Bill or Act:
Pension Benefits Act
Summary of Decision:
Ontario Regulation 466/11 was filed on December 16, 2011.
Further Information:
Pension Benefits Act
Regulation 909
Ontario Regulation 466/11
McGuinty Government Taking Additional Steps to Strengthen Ontario's Pension System
Proposal Number:
11-MOF024
Posting Date:
Summary of Proposal:
The regulation is effective January 1, 2012.
As outlined in the government's August 24, 2010 announcement, the regulation would increase PBGF assessments by:
- establishing a minimum assessment level of $250 for each pension plan covered by the PBGF;
- raising the base fee per plan member from $1 to $5;
- raising the maximum fee per plan member in underfunded pension plans from $100 to $300; and
- eliminating the overall assessment cap, currently $4 million, for underfunded pension plans.
The regulation includes a change in the methodology for calculating a PBGF claim. It would require that no plan assets be used on wind up to pay for any benefit improvements made in the last five years if the plan is underfunded and entitled to make a PBGF claim. This would modify the calculation of a PBGF claim to more effectively exclude recent benefit improvements, thereby reducing the risk to the Fund.
This change is consistent with an amendment to s. 85 of the Pension Benefits Act being proclaimed concurrently with the regulation. This amendment, part of the Securing Pension Benefits Now and for the Future Act, 2010, extends the period during which new plans and benefit improvements in existing plans are excluded from PBGF coverage from 3 to 5 years.
The regulation would also clarify the role of the new Multi-Jurisdictional Agreement when a multi-jurisdictional plan is wound up. This is an administrative change which affects the terminology used to specify how to calculate a PBGF claim.
Since 1980, Ontario's PBGF has provided pensioners and plan members with a degree of benefit protection when plans are wound up with insufficient funds to cover promised benefits. The government has implemented the first three parts of its four-part strategy to mitigate the financial risks and place the PBGF on a more sustainable financial footing. (Details of the government's PBGF strategy can be found in the government's August 24, 2010 announcement - see the link under Further Information above.)
As outlined in the government's August 24, 2010 announcement, the regulation would increase PBGF assessments by:
- establishing a minimum assessment level of $250 for each pension plan covered by the PBGF;
- raising the base fee per plan member from $1 to $5;
- raising the maximum fee per plan member in underfunded pension plans from $100 to $300; and
- eliminating the overall assessment cap, currently $4 million, for underfunded pension plans.
The regulation includes a change in the methodology for calculating a PBGF claim. It would require that no plan assets be used on wind up to pay for any benefit improvements made in the last five years if the plan is underfunded and entitled to make a PBGF claim. This would modify the calculation of a PBGF claim to more effectively exclude recent benefit improvements, thereby reducing the risk to the Fund.
This change is consistent with an amendment to s. 85 of the Pension Benefits Act being proclaimed concurrently with the regulation. This amendment, part of the Securing Pension Benefits Now and for the Future Act, 2010, extends the period during which new plans and benefit improvements in existing plans are excluded from PBGF coverage from 3 to 5 years.
The regulation would also clarify the role of the new Multi-Jurisdictional Agreement when a multi-jurisdictional plan is wound up. This is an administrative change which affects the terminology used to specify how to calculate a PBGF claim.
Since 1980, Ontario's PBGF has provided pensioners and plan members with a degree of benefit protection when plans are wound up with insufficient funds to cover promised benefits. The government has implemented the first three parts of its four-part strategy to mitigate the financial risks and place the PBGF on a more sustainable financial footing. (Details of the government's PBGF strategy can be found in the government's August 24, 2010 announcement - see the link under Further Information above.)
Contact Address:
Pension Policy Branch
Office of Taxation, Agencies, and Pensions
Ministry of Finance
5th Floor Frost Building South
7 Queen's Park Crescent East
Toronto, ON M7A 1Y7
Office of Taxation, Agencies, and Pensions
Ministry of Finance
5th Floor Frost Building South
7 Queen's Park Crescent East
Toronto, ON M7A 1Y7
Effective Date:
January 1, 2012
Decision:
Approved