May 12, 2017
In a previous Blog Post we reviewed highlights from the 2017 Federal Budget. The 2017 Ontario Budget was released on April 27, 2017. The Ontario Budget contains the significant commitment to a universal pharmacare program for persons under 25, as well as a number of updates with respect to various pension reform efforts.
OHIP+ Children and Youth Pharmacare: The government announced OHIP+, a universal drug coverage program for children and youth 24 years of age or younger. Residents meeting the age restriction will receive free prescription medications by presenting their Ontario health card number and prescription, with no deductible or co-payment. The program takes effect on January 1, 2018. Coverage will include all prescriptions covered by the Ontario Drug Benefit Program, including the Exceptional Access Program.
The impact of OHIP+ on private plans can only be fully assessed once the Regulations are released. However, there is indication that OHIP+ is intended to be the “first payer,” which would likely result in savings for employer and union-sponsored plans.
Pension Updates The Ontario Budget provided an update on the status of a number of pension reforms and reviews:
Solvency Funding Review: the Government has currently reviewed over 90 submissions in response to its July 2016 consultation paper on solvency funding. The guiding principles of the new framework, and measures to support transition to the new framework, will be released in Spring 2017, and draft regulations will follow in Fall 2017.
Target Benefit Multi-Employer Plans (TBMEPPs): The Budget reiterates the Government’s commitment to developing a new regulatory framework for TBMEPPs to replace the current funding regulations in place for specified Ontario multi-employer pension plans (SOMEPPS). The government is reviewing feedback in response to its 2015 consultation paper, and intends to announce the proposed TBMEPP framework in Spring 2017, with draft regulations in Fall 2017.
Defined Contribution Plans: The Government has indicated its intent to modernize the legislative and regulatory framework relating to Defined Contribution (DC) plans, consider new options for payouts in the decumulation phase, and strengthen DC participation and performance. As a first step, amendments will be introduced to facilitate the implementation of variable benefits, with regulations being introduced in Spring 2017.
Enhanced Powers of Superintendent: In addition to administrative monetary penalties (AMPs) introduced in Fall 2016, the Budget proposes additional powers for the Superintendent, including authority for the Superintendent to direct a plan administrator to provide plan beneficiaries with information specified by the Superintendent and to hold a meeting to discuss matters specified by the Superintendent.
Missing Beneficiaries: The Government will instruct the Superintendent to develop a policy to provide direction to administrators on steps they should take to locate missing beneficiaries, who currently fall into a legislative and regulatory gap. The Government will also introduce an amendment to the PBA providing authority to the Superintendent to waive the requirement of periodic pension statements in situations where it can be demonstrated that the beneficiary should be considered missing. The Budget indicates the government will consider further options such as a missing beneficiary registry, and options to protect the benefits of missing beneficiaries on wind-up of pension plans.
Financial Services Regulatory Authority (FSRA): The Budget provides an update on the status of the development of the FSRA, which is eventually intended to replace FSCO – indicating the Government expects to appoint the first board of directors of the FSRA in Spring 2017. Legislative amendments regarding the mandate and governance structure of the FSRA, and the structure and powers of the Financial Services Tribunal (FST), are expected to be introduced by the end of 2017. The Government is also currently looking at amendments that would enable the FST to more efficiently manage its caseload.
Merger of SEPPs and JSPPs: Amendments have been proposed to the PBA to facilitate the merger of public sector single-employer pension plans with jointly sponsored pension plans and to clarify the asset transfer rules applying to these mergers.
Pension and Benefits