Proposed Amendments to Ontario Regulation 909 of the Pension Benefits Act: Requiring Pension Plan Administrators to Provide Information Relating to Their Pension Plan's Pension Benefits Guarantee Fund (PBGF) Exposure to Potential Future Claims
Regulation - LGIC
Bill or Act:
Pension Benefits Act
Summary of Proposal:
Budget 2021 announced the outcome of the first review of the PBGF. The review found that there is a need for data to better estimate the PBGF's exposure to potential future claims.
To address this, the government is proposing to amend Regulation 909 under the Pension Benefits Act to require every valuation report in respect of a PBGF-eligible pension plan to include the following additional information:
1) The amount of the solvency liabilities of a pension plan that related to Ontario plan beneficiaries in respect of pensions or accrued pension benefits that are less than or equal to $1,500 per month. This new requirement is called the plan's "modified PBGF liabilities" in the proposed regulation and would facilitate the calculation of the plan's estimated PBGF claim amount as of the valuation date.
2) Information about Ontario plan beneficiaries who are receiving pensions or who have accrued pension benefits under the plan, including:
i) The number of Ontario plan beneficiaries;
ii) The number of Ontario plan beneficiaries (both those receiving pensions and those who have accrued pension benefits) at or below the $1,500 guarantee amount;
iii) The 10th, 20th, 30th, 40th, 50th, 60th, 70th, 80th and 90th percentiles of the amounts payable under the pension plan to Ontario plan beneficiaries determined by reference to all of the pensions and accrued pension benefits (i.e., the amount that is greater than 10% of the pensions and accrued pension benefits payable under the plan; the amount that is greater than 20% of the pensions and accrued pension benefits payable under the plan; and so on); and
iv) The amount of the largest pension or pension benefit that has accrued under the pension plan to an Ontario plan beneficiary.
3) For each percentile that is required to be calculated under 2 iii), the amount of solvency liabilities of the pension plan that relates to Ontario plan beneficiaries in respect of all pensions and accrued pension benefits that are less than the percentile (i.e., valuation reports would include the amount of solvency liabilities that relates to the smallest 10% of all pensions and accrued pension benefits; the amount of solvency liabilities that relates to the smallest 20% of all pensions and accrued pension benefits; and so on).
This additional information would provide the data necessary to estimate the extent to which Ontario plan beneficiaries are protected by the PBGF.
Analysis of Regulatory Impact:
This proposal to amend Regulation 909 is expected to result in minimal administrative costs to businesses. Initial estimates suggest that it could add up to 5% to the cost of preparing a valuation report the first time the calculation is made, but that the cost of making the calculation in subsequent valuation reports would be significantly lower.
April 15, 2021
Comments Due Date:
May 31, 2021
Pension Policy Branch
Ministry of Finance
5th Floor, Frost Bldg S.
7 Queen's Park Crescent
Toronto, ON M7A 1Y7