TORONTO - Ontario's woefully underfunded pension guarantee scheme is receiving legislative amendments that allow the government to essentially abandon it when what's really required is a massive loan to protect workers, the New Democrats charged Tuesday.
The Pension Benefits Guarantee Fund provides the province's pensioners with up to $1,000 a month in the event a plan fails to provide its full benefit, or any benefit at all. It is funded by corporate contributions, and the government has no legal obligation to top it up.
With about $100 million in funds, the government admits it's dramatically underfunded, especially when the General Motors pension shortfall alone could top $6 billion.
"Essentially we've had an insurance policy nobody has paid the premiums on, and it's coming due," said Finance Minister Dwight Duncan.
"There is a real issue with the pensions benefit guarantee fund, which has been underfunded for many years."
The legislative amendments would enshrine into law the existing regulations governing the fund, giving the government more options, Duncan said. That includes the power to provide loans or grants to the fund without the approval of the legislature.
The NDP said that clause would also allow the government to simply not make loans or grants at all, even though it usually topped up the fund when it was inadequate to meet demand.
"At the precise time that these workers need reassurance from the government that their pensions are secure, the McGuinty government is putting forward legislation that says 'you're on your own, your provincial government has no responsibility to safeguard your pensions,"' Horwath said in the legislature.
"The legislation gives the government a back door so they can abandon the Pension Benefits Guarantee Fund."
Duncan insisted the province wasn't abandoning the fund, saying the "amendments give us more flexibility."
However, he strongly suggested there wouldn't be any taxpayer money going into the fund, noting 70 per cent of Ontarians don't even have a pension plan.
"The reality is that no government has stood behind that fund (and) that there is no money in that fund," Duncan said in the legislature.
"We have to strike a balance, to be fair to all people, taxpayers, pensioners and to those who have seen life savings diminished by financial markets."
The provincial government added hundreds of millions of dollars to the fund in the past when it was insufficient to meet demand, including when farm-equipment maker Massey Ferguson and when Algoma Steel filed for bankruptcy during previous recessions.
The government also made a direct loan of $150 million to Stelco, which was contingent on a payment by Stelco into its pension plan.
However, given the severe impact the recession has had on Ontario's manufacturing base, Duncan told the legislature there was no way the pension guarantee fund could be expected to help all those who may need it.
"GM, Nortel, AbitibiBowater -- the amounts to stabilize and provide that are not present," he said.
The best way to protect GM pensions is to help the automaker stay in business, something the provincial and federal governments are willing to spend billions of dollars on to guarantee, added Duncan.
Horwath said the government has a duty to make sure the pension guarantee fund is there for the tens of thousands of Ontario workers whose jobs and pensions are on the line in the current economy.
"We know the fund has been shored up by long-term loans from government that get paid back over time, and that needs to happen now, especially when our pension funds are in crisis," she said.
"The pensions of tens of thousands of workers and retirees. . . . are at risk."
Duncan said the province was considering ways to increase the amount in the fund, perhaps by requiring higher corporate contributions or even new premiums to be paid by Ontario workers.
"The thing we have to look at now if we're going to do it is, we have to pay for it," he said.
"It's not something that would be funded out of general revenues."
