Nov. 16, 2018
The Ontario government’s decision to move forward with legislation around variable benefits from defined contribution (DC) plans will be a “welcome change” from a members’ perspective, Osler partner Jana Steele tells Benefits Canada. In her article, author Jennifer Paterson discusses how the introduction of variable benefit accounts in Ontario will facilitate “mergers into jointly sponsored pension plans” and enable “the electronic designation of beneficiaries in pension plans.” The article explores how Ontario will be joining some other provinces that already have DC plans in place that pay variable benefits to members at retirement. Jana, a partner in Osler’s Pensions & Benefits Group, explains the implications.
“This is a change that people have been asking for in terms of making the Ontario legislation such that variable benefits can be paid out of DC accounts,” Jana tells Benefits Canada.
“Ultimately, to the extent that employers determine to amend their plans to offer it . . . the question will be, how many DC sponsors will amend their plans to provide the option? Assuming that some do, it would be, from the members’ perspective, a welcome change, because it would assist with the decumulation phase that’s provided under the plan.”
The article also discusses how the Ontario government is eyeing improvements to the university sector’s pension system, referencing some universities’ combining of their respective pension plans into a jointly sponsored defined benefit plan (JSPP).
“Based on the shared risk structure between plan members and employers, it is expected that this newly established plan would be treated similarly to other broader public sector, solvency exempt JSPPs following a successful conversion and a request from the newly established university plan,” Jana tells Benefits Canada.
Jana explains why this development is interesting. “Whether or not it impacts one particular person or entity directly is not as important as the more holistic look at what’s happening. We have seen significant interest and activity in the industry around plan consolidations, transfers . . . and consolidation, as we all know, can provide economies of scale and other benefits.”
For more information, read author Jennifer Paterson’s article “Ontario to move forward with variable benefits from DC pensions” in Benefits Canada on November 16, 2018.