July 7, 2017
Ontario is implementing a new target-benefit framework, which will replace the temporary solvency funding exemption in place for specified multi-employer pension plans, according to a recent article in Benefits Canada. Writer Jann Lee turns to Jana Steele, a partner in Osler’s Pensions and Benefits Practice Group, for insight on the new framework, which “will require target-benefit multi-employer plans to provide opportunities for retirees to participate in governance and offer more disclosure to members on the status of their plans.”
Jana tells Benefits Canada that the framework will permanently exempt collectively bargained target-benefit multi-employer pension plans from solvency funding, and will bring other obligations. “The solvency funding is only one element contained in the new framework. Other things are looking at requiring a funding and governance policy that’s consistent with what Alberta and British Columbia did for their multi-employer pension plan regimes,” says Jana.
As the article notes, under the framework, target-benefit plans will have to meet new standards that come along with a going-concern funding requirement, including setting aside a reserve called a provision for adverse deviation.
Jana states that if “Ontario follows the B.C. and Alberta regulations, a plan’s risk profile will drive the size of its reserve.” “The riskier the plan investments, the greater the provision for adverse deviation. But Ontario hasn’t said what theirs is going to look like,” she explains.
For more of Jana’s insight and information on Ontario’s new target-benefit framework, read Jann Lee’s full article “Ontario sets out plans for target-benefit multi-employer pensions” in Benefits Canada.