As promised in the 2005 budget, Ontario’s Finance ministry has issued a consultation paper on the funding of jointly sponsored defined benefit pension plans, and potential areas of conflict between the terms of these plans and the Pension Benefit Act.

The PBA was written with traditional sole sponsorship defined benefit pension plans in mind where the employer is solely responsible for making special payments in respect of a going concern unfunded liability or solvency deficiency. The PBA assumes that plan members are not responsible for making such payments.

With the establishment of JSPs, conflicts may exist between some of the provisions of these plans and the PBA requirements. In order to assess these conflicts, the province is publishing a consultation paper which identifies the areas of conflict and proposes solutions.

While the focus of this paper is on JSPs, there are a few proposals, regarding transfer deficiencies and actuarial cost methods, which would apply to all defined benefit pension plans. Legislation to amend the PBA to address these issues will be introduced in the fall and, if approved by the legislature, it is expected that the changes will be in effect before year-end, the ministry says.

Comments are due by September 16.