Proposal
A Permanent Framework for Target Benefits
Regulation Number(s):
Regulation 909
New regulation yet to be named
New regulation yet to be named
Instrument Type:
Proposal
Bill or Act:
Pension Benefits Act
Summary of Proposal:
In March 2023, the Ministry of Finance launched its consultations on proposed regulations necessary for implementing a permanent target benefit framework in Ontario.
In response to stakeholder feedback, revised proposals are outlined in a second consultation paper, which include:
• A revised approach to the provision for adverse deviations (PfAD) in which plan administrators would have discretion to establish their plan's PfAD in line with the plan's funding and benefits policy;
• Streamlining requirements for the conversion process;
• Permitting the commuted value calculation to include a reduction by the plan's going concern funded status, if required by the terms of the plan; and
• Adding a requirement for plan administrators to establish and file a communications policy, while revising some of the proposed minimum information required to be included in member communications.
This second paper builds on the previous paper by setting out the revised proposals and providing additional details on some of the elements addressed in the previous paper.
The objective of the proposed permanent target benefit framework is to strengthen governance, improve transparency and support long-term plan sustainability for plan members and employers.
The Ministry invites feedback from stakeholders on the proposals in this second consultation paper.
In response to stakeholder feedback, revised proposals are outlined in a second consultation paper, which include:
• A revised approach to the provision for adverse deviations (PfAD) in which plan administrators would have discretion to establish their plan's PfAD in line with the plan's funding and benefits policy;
• Streamlining requirements for the conversion process;
• Permitting the commuted value calculation to include a reduction by the plan's going concern funded status, if required by the terms of the plan; and
• Adding a requirement for plan administrators to establish and file a communications policy, while revising some of the proposed minimum information required to be included in member communications.
This second paper builds on the previous paper by setting out the revised proposals and providing additional details on some of the elements addressed in the previous paper.
The objective of the proposed permanent target benefit framework is to strengthen governance, improve transparency and support long-term plan sustainability for plan members and employers.
The Ministry invites feedback from stakeholders on the proposals in this second consultation paper.
Analysis of Regulatory Impact:
The proposed framework would establish target benefits as a permanent part of Ontario's pension landscape by implementing a comprehensive legislative and regulatory framework. Pension plans that provide target benefits would offer members a monthly income stream in retirement at a predictable cost for employers.
For plan administrators that wish to convert eligible pension benefits to target benefits, there would be initial costs associated with developing written governance and funding policies and filing with the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (FSRA).
For plan administrators that wish to convert eligible pension benefits to target benefits, there would be initial costs associated with developing written governance and funding policies and filing with the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (FSRA).
Further Information:
A Permanent Framework for Target Benefits
Proposal Number:
23-MOF015
Posting Date:
September 1, 2023
Comments Due Date:
October 17, 2023
Contact Address:
A Permanent Framework for Target Benefits
Pension Policy Branch
Ministry of Finance
5th Floor, Frost Building South
7 Queen's Park Crescent East
Toronto, ON
M7A 1Y7
or
Contact Email: Pension.Feedback@ontario.ca
Pension Policy Branch
Ministry of Finance
5th Floor, Frost Building South
7 Queen's Park Crescent East
Toronto, ON
M7A 1Y7
or
Contact Email: Pension.Feedback@ontario.ca