Written By Jordan Fremont and Ben Sissons
On November 14, 2022, Ontario introduced Progress on the Plan to Build Act (Budget Measures), 2022 (Bill 36) to implement certain budget measures introduced as part of Ontario's 2022 Ontario Economic Outlook and Fiscal Review—Ontario's Plan to Build: A Progress Update. Bill 36 includes proposed amendments to Ontario's Pension Benefits Act (PBA) to require the establishment of governance and funding policies for Ontario registered pension plans (Ontario pension plans). Substantially similar amendments to the PBA had previously been introduced in connection with Ontario's 2017 budget but have not been proclaimed into force.
If the Bill 36 amendments to the PBA are adopted as proposed, Ontario pension plans would become subject to the following requirements:
- Ontario pension plans that are target benefit plans (Target Benefit Plans) would be required to establish funding and governance policies, subject to certain transitional measures for plans that convert to Target Benefit Plans.
- Other Ontario pension plans would be required to establish funding and governance policies at some future date, to be proclaimed.
- A collective agreement would be included amongst the documents that create and support an Ontario pension plan. It would also need to be filed with the Financial Services Regulatory Authority of Ontario where any of the following conditions are satisfied:
the plan has been established pursuant to the collective agreement;
the collective agreement incorporates the plan by reference in whole or in part; or
the terms of the plan are set out in whole or in part in the collective agreement.
The proposed amendments to the PBA do not describe what must be included within governance or funding policies but instead contemplate that such content be prescribed by way of regulation. For the time being, some ideas as to what might be required for governance policies can be gleaned from what's been required under pension standards legislation in Alberta, British Columbia and New Brunswick. Additionally, for potential funding policy content requirements, see the Canadian Association of Pension Supervisory Authorities' Pension Plan Funding Policy.
With the introduction of Bill 36, the Ontario government has signaled a renewed commitment to implementing governance and funding policy requirements for Ontario Plans. When considered alongside other similar initiatives (including governance policy requirements already in place under pension standards legislation in Alberta, British Columbia and New Brunswick—and pending changes to the Pension Benefits Standards Act)—there is clearly momentum behind the move towards having governance and funding policies set out as a statutory requirement. Even if not required by legislation, adoption of such policies could be helpful tools to assist with managing plan risks and improving plan outcomes and therefore aligned with good plan governance.
We will continue to monitor and update you on the progress of the proposed amendments to the PBA and other related developments. Members of the Bennett Jones Pensions & Benefits group would be pleased to discuss any questions respecting these initiatives or to assist with the development or review of a pension governance or funding policy.