Workplace Wire

Connecting employers to developments in labour, employment & pension law

Potential Impact of the Ontario Budget on Pension Law


Last week Thursday, the Liberal government in Ontario released itsproposed budget. While we’re still waiting to hear from the NDP as to whether their support will ensure its passage, we have prepared a brief summary on its potential impact on pension law in Ontario should it ultimately be passed.

Last November, we wrote about the case of Carrigan v. Carrigan Estate, in which the Court of Appeal overturned the commonly understood interpretation of the death-benefit entitlement provisions of the Pension Benefits Act, in a way that potentially disentitles many common law couples from their spouses’ pensions. In this budget, the government has committed to reviewing this case and its potential effects in order to determine whether amendments to the PBA would be appropriate.

In a significant shift from the position taken by the McGuinty government, this budget proposes that Ontario consult with interested parties about how Pooled Registered Pension Plans could be implemented in Ontario. Other provinces had previously committed to implementing these plans, which have been proposed by the federal government as a way to increase retirements savings. Under McGuinty, the position of the government had been that Ontario would not implement these plans, but it seems the Wynn government does not want to be left behind as other provinces do implement them. Even if the plans were implemented, participation would be voluntary.

Previous budgets have also committed the government to developing a framework for single employer Target Benefit Plans in collectively bargained workforces. These plans vary employer and employee contributions in an attempt to amass enough assets to pay out a target (but not guaranteed) benefit upon retirement. This budget reiterates the commitment to making rules and regulations to allow employers to introduce these plans, but does not comment on whether these plans may eventually be available for non-unionized workplaces.

Finally, the budget reiterates previous announcements relating to public sector pensions, but does not add nothing new in this area. It continues a previous commitment to move public sector pension plans away from fragmented Single Employer Pension Plans, and to move all existing SEPPs towards a 50% employee contribution ratio over the next 5 years.

If you have any questions on how this proposed budget may affect pension law in Ontario, please do not hesitate to contact me directly.

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