Ontario moving to shore up pension plans
TORONTO - Ontario is laying the groundwork for what it promises will be a major reform of the province's pension system aimed at creating a system that will be better able to withstand economic turmoil.
"These amendments today we believe will give pensioners better coverage, better protection, a better regulatory environment," said Finance Minister Dwight Duncan.
In the first part of a two-stage process, the government announced it will clarify benefits for people who are affected by layoffs, eliminate partial pension windups after 2011, and make it easier for plans to restructure when companies do.
The legislation, introduced Wednesday, also extends benefits that allow laid-off workers to qualify for early retirement to make it available to more people. It will also enhance regulatory oversight and make it easier for plan members and pensioners to access information.
Duncan said Wednesday's technical changes were the smaller of the two stages, with more controversial ones coming in 2010. It's the first major change in 20 years.
"We wanted to get the easier things done and out of the way and then focus on the more contentious issues," said Duncan.
"There is still disagreement between employers and employees on some aspects of it but I think overall we've got a good balance, that's what we hoped to achieve."
Much of the plan is based on recommendations made by Harry Arthurs, former president of York University in Toronto, who last year suggested the province enhance its pension guarantee fund and appoint a full-time pension advocate, among several other things.
These first changes won't deal with the province's pension benefits guarantee fund, which provides Ontario pensioners with up to $1,000 a month in the event a plan fails to provide its full benefit, or any at all.
Ontario is the only province that has a pension benefits guarantee fund, which is funded by corporate contributions. The government has no legal obligation to top it up, but Ontario has admitted that with only about $100 million in funds, the pension guarantee fund is dramatically under-funded.
Duncan said the second part of the bill may address some of the issues with the fund, which is also the subject of a separate actuarial study.
NDP critic Paul Miller said he was disappointed with the government's failure to address the pension benefits guarantee fund, and asked for more action to expand pension coverage.
"With only 35 per cent of Ontarians covered by an occupational pension plan, there's a clear need for expanded pension coverage for all working Ontarians," Miller said.
"We in the Ontario NDP do not believe that the (federal) government is going to move to expand coverage and therefore we believe there's an important role to be played at the provincial level."
Progressive Conservative critic Norm Miller said the government should have acted sooner, noting it's been almost a year since it received the Arthurs report.
Public and private pension plans across the country have taken a massive hit from the combination of the financial crisis and historically low interest rates, at the same time that the recession has pushed many companies into bankruptcy -- with some pensioners left in the lurch.
Both Duncan and Premier Dalton McGuinty have said that one of the issues the province must deal with is the fact that the majority of people in Ontario don't have a pension plan.
McGuinty has long called for a national summit on pension reform, since British Columbia, Alberta, Saskatchewan and Nova Scotia are also talking about some kind of pension changes to make sure people can afford to maintain a quality lifestyle when they retire.
The federal government hasn't agreed to such a meeting, but it announced some pension changes in October.
Most of those measures, however, only affect the plans that are under federal jurisdiction, such as airlines, telecommunications firms and railways.
There are more than 7,500 pension plans registered in Ontario with about two million members.