Ontario Government Proposes New Pension Funding Legislation
December 16, 2008, 4:16 PM EST
The Ontario government announced plans on December 16 to introduce legislation to provide defined benefit pension plans with solvency funding relief.
While the CAW agrees with the principle of providing funding relief at a time of severe global financial crisis, the union is concerned about a number of key features of the proposed legislation.
The CAW agrees with the condition that extending amortization periods from five to 10 years can only occur with the consent of the collective bargaining agent, or in unorganized workplaces, with the consent of active and retired workers. Yet it is unclear how the proposal to consolidate previous funding schedules will interact with the proposal to extend amortization periods, according to CAW Pensions and Benefits Director Sym Gill.
Some of the other measures announced are only stated in vague terms. For example, consideration is to be given to temporary limitations on certain contribution holidays, but no detail has been provided on either what constitutes a temporary period, nor the conditions that will define which contribution holidays are subject to these limitations. Similarly, no details have been provided on the proposal to consider accelerated funding of benefit improvements.
"It's disappointing that these announced measures for funding relief were not accompanied by specific measures which would directly enhance benefit security," said CAW President Ken Lewenza. "Increasing the maximum coverage under the Pension Benefit Guarantee Fund, from $1,000 to $2,500, as explicitly recommended by the Expert Commission on Pensions would go a long way to assist retired workers."
The union is looking forward to working with the government as these announced measures are fleshed out and turned into legislation which not only provides funding relief for pension plan sponsors, but also real enhanced security for pension plan members, Lewenza said.