The Ontario government Wednesday launched consultations on a new legislative framework for jointly sponsored, public sector pension plans.
In its latest budget the government announced that it will be proposing reforms to the framework that governs public sector pension plans, in an effort to make them more sustainable, and more affordable for taxpayers. Affected groups will be consulted on the proposed legislative framework, it notes.
The government says that while the jointly sponsored plan model works well, the cost of providing benefits has increased significantly and is projected to continue to rise. It’s aiming to reduce the growth in the cost of providing these benefits.
On Wednesday, the government said that the proposed framework will include: requiring plans to reduce future benefits or ancillary benefits before increasing employer contributions where a new funding deficit emerges; setting limits on benefit reductions before contribution increases could be considered; increasing employee contributions where they are currently less than employer contributions; and, introducing a new, third-party dispute resolution process in cases where plan sponsors cannot agree on benefit reductions through negotiation.
It also intends to introduce a legislative framework in the fall that would pool investment management functions of smaller broader public sector pension plans, it said.
“These measures are part of the government’s five-year plan to keep Ontario on track to balance the budget by 2017-2018 while ensuring long-term sustainability of core public services,” said finance minister, Dwight Duncan.