Ontario Budget Proceeds with Pension Benefits Act Amendments to Implement a New Target Benefit Pension Plan Framework

April 8, 2024

Anthony Guindon

On March 26, 2024, the Government of Ontario released its 2024 budget.  The budget reaffirmed the Ontario Government’s intention to implement a permanent framework for target benefit pension plans as of January 1, 2025.  The Government indicated that it intends to publish draft regulations in the summer of 2024, which will take into consideration feedback received during its recent consultations with industry stakeholders.

Bill 180, An Act to implement Budget measures and to enact and amend various status, which was tabled for first reading on March 26, 2024, sets out a number of amendments to the Pension Benefits Act to facilitate the implementation of this framework.  These amendments reflect revised proposals issued by the Ontario Ministry of Finance on September 1, 2023 (see our September 14, 2023 Blog), including the following:

• target benefit plans will be required to establish a communications policy, in addition to establishing a funding (now referred to as “funding and benefits” policy) policy and governance policy, and these will have to be filed with the pension regulator;
• existing paragraph 3.1 of section 39.2 (not currently in force) is being amended, to remove the requirement that benefits be determined with reference to contributions made to the plan and interest on such contributions, and to add a requirement that the benefit be determined with reference to the value of the assets in the pension fund, subject to applicable regulations;
• administrators of pension plans that are planning to convert to target benefit plans will be required to consult in good faith with any trade unions representing members of the plan, and any other association that represents members, former members or retired members of plan in negotiating in respect of plan terms; and
• administrators of target benefit plans will be required to provide any information required by the FSRA CEO to determine whether the PfAD used by the administrator complies with the requirements of the Pension Benefits Act and its regulations.

A number of key measures necessary for the implementation of a permanent target benefit framework will be contained in the regulations the government intends to release for final consultation in the summer of 2024.

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