Pensions: Keep the Change

10 mai 2018 | Kim Ozubko

( Disponible en anglais seulement )

In recent years, Canadian pension standards legislation has been in, what seems to be, a constant state of change. In this blog post, we highlight some of the more significant recent and proposed legislative changes in Ontario, Québec and the federal jurisdiction.


Defined Benefit Plan Solvency Funding Reform: Following a lengthy consultation process, in May 2017, the Ontario government introduced a new funding framework for defined benefit pension plans. Among the most significant changes are the elimination of solvency funding for defined benefit plans with a solvency funding ratio of 85% or greater and the introduction of an administrative discharge when annuities are purchased for retirees or deferred plan members. As part of the changes, like in BC and Alberta, defined benefit plans will also be required to have both governance and funding policies. Unlike in BC and Alberta, where such policies do not have to be filed with the applicable pension standards regulator, the policies will have to be filed with the Ontario Superintendent of Financial Services (“Ontario Superintendent”).

Regulations in respect of the administrative discharge on the purchase of annuities have recently been filed but we continue to wait for much of the new funding rules and details on the required content of the policies. It is expected (hoped) that the new framework will be in place later this year.

Administrative Monetary Penalties: Effective January 1, 2018, the Ontario Pension Benefits Act was amended to give the Ontario Superintendent the authority to impose administrative monetary penalties. The penalties may be imposed for defined breaches of the legislation and may not be paid from the pension fund. The maximum penalty that can be imposed is $25,000 in respect of a person, other than an individual, and $10,000 in respect of an individual.


Bill 176: In March 2018, the Québec government introduced Bill 176, An Act to amend the Act respecting labour standards and other legislative provisions mainly to facilitate family-work balance (“Bill 176”). Of interest to pension plan sponsors and administrators should be the provision in Bill 176 that prohibits any distinction with respect to pension plans or other employee benefits that affects employees performing similar tasks in the same establishment if the distinction is made solely on the basis of date of hire. In other words, if Bill 176 becomes law, a provision in a pension plan which provides that similarly situated Québec employees hired on or after a certain date participate in the defined contribution component of the plan whereas employees hired before that date participate in the defined benefit component of the plan would be prohibited, as would the adoption of different contribution rates based on date of hire. Both provisions are common distinctions in pension plans.

Under Bill 176, the new restriction would not apply retroactively to distinctions that existed before the day prior to Bill 176 coming into force, which date is yet to be determined. If Bill 176 becomes law, Québec will be the only jurisdiction in Canada with such restrictive provisions.


Target benefit plans: In late 2016, the federal government introduced Bill C-27, An Act to amend the Pension Benefits Standards Act, 1985 (“Bill C-27”). Among other changes, Bill C-27 proposed a framework for the establishment, administration and supervision of target benefit plans. Target benefit plans are a middle ground between defined benefit and defined contribution pension plans. A target benefit plan has fixed contributions and a target defined benefit level but gives the plan sponsor the ability to adjust contributions and reduce benefits in certain circumstances. Under Bill C-27, past service defined benefit or defined contribution benefits may be converted to target benefits upon consent.

The proposed target benefit regime is welcome news for employers but the proposal to allow conversion of past service benefits has been met with strong criticism from employee groups and unions. As a result, it remains to be seen if and when the proposed new regime will come into force.


For further information on any of the above changes, please contact Kim Ozubko at or 416-597-4338.

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