2019 Ontario Budget: Impact on Pensions and Benefits

April 25, 2019 | Kim Ozubko

On April 11, 2019, the Ontario government released its 2019 Budget: Protecting What Matters Most (the “2019 Budget”) and introduced for first reading the related Bill, Bill 100, Protecting What Matters Most Act (Budget Measures), 2019 (“Bill 100”). There were a number of provisions related to pensions and benefits in the 2019 Ontario Budget and Bill 100. In this post, we highlight some of those provisions.

Financial Services Regulatory Authority

As reported in earlier posts (see this post, for example), the Ontario government intends to move forward with launching the Financial Services Regulatory Authority (“FSRA”) in June 2019. Upon full implementation, FSRA will replace the Financial Services Commission of Ontario as the regulator of pension plans subject to the Pension Benefits Act (Ontario) (“PBA”).

Under the Financial Services Regulatory Authority of Ontario Act, 2016 (“FSRA Act”), FSRA has been granted certain rule-making authority with respect to the sectors under its mandate, including the pension sector. In the 2019 Budget, the government indicated that it is “considering legislative and regulatory changes that would provide the FSRA with additional rule-making authority in the pension sector.” Under Bill 100, the government has also proposed certain amendments to the FSRA Act, including the introduction of a provision requiring that FSRA provide notice containing “a qualitative and quantitative analysis of the anticipated costs and benefits” of a proposed rule.

Reducing Red Tape in the Pension Sector

Under the heading of “Reducing Red Tape in the Pension Sector” in the 2019 Budget,  the Ontario government committed to the following initiatives in the pension sector:

Expansion of Target Benefit Framework

A target benefit plan is a hybrid plan consisting of elements of both a defined benefit and defined contribution plan: a plan with fixed contributions similar to a defined contribution plan but with targeted defined benefit type pensions. The key difference between a defined benefit and target benefit plan is that benefits under a target benefit plan can be adjusted. Currently, the target benefit framework in Ontario applies only to collectively bargained multi-employer pension plans.

In the 2019 Budget, the government committed to expanding the target benefit framework to allow more multi-employer pension plans, including those in the non-unionized not-for-profit sector, to participate. The government did not propose to further expand the target benefit framework to apply to single employer plans but indicated that it “will continue to work with stakeholders as it develops further elements of the target benefit framework, including the funding framework.”

Bill 100 includes proposed amendments to the PBA to reflect the expansion of the target benefit framework announced in Budget 2019.

Electronic Communications

In the 2019 Budget, the Ontario government indicated that it was “considering future legislative changes to the Pension Benefits Act to modernize the pension sector and streamline pension plan administration by permitting plans to use electronic communication as the default method.”

This proposal is consistent with the steps the government took in late 2018 to amend the PBA to allow administrators of pension plans to permit electronic beneficiary designations. Under Bill 100, the government has also proposed amending the Insurance Act (Ontario) to clarify that insurers may accept electronic beneficiary designations, subject to any requirements that FSRA may prescribe in a rule.

Dental Care for Low-Income Seniors

According to the Ontario government, at least two-thirds of low-income seniors do not have access to dental insurance. In the 2019 Budget, the government committed to introducing a new dental program for low-income seniors. According to the government, by late summer of 2019, single seniors age 65 and older with incomes of $19,300 or less (or senior couples with combined incomes of $32,300) who do not have existing dental benefits will be able to receive dental services in public health units, community heath and aboriginal health access centres in the province.

For further information, please contact Kim Ozubko at kozubko@millerthomson.com or (416-597-4338), or subscribe to our A.M. Pension Blog and webinar series to stay informed on the latest developments.


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