In a move praised by all sides in the debate over the state of workplace pension plans, the Ontario government has just appointed a commission of pension experts to review the province’s pension laws.

The commission will make recommendations to ensure the pension system is “up to date and sustainable.” The province’s current Pension Benefits Act has been in place since 1986.

Chaired by respected labour law expert Harry Arthurs, who has just finished an assignment reviewing federal labour standards legislation, the commission is scheduled to hold hearings, undertake research and report back by the summer of 2008.

That will be after the next provincial election, scheduled for 2007. But Scott Perkin, president of the Association of Canadian Pension Management — a national organization representing pension plan sponsors and their advisors — says, regardless of the election outcome, the timing of the report early in the mandate of a new government should make it easier to take action and deal with a range of difficult issues expected to be addressed in the commission’s report.

“The ACPM is pleased to see Ontario finally moving forward,” says Perkin. “We hope whatever comes out of it will be taken seriously.”

Appointments to the commission represent a great collective expertise and should ensure a balanced perspective, he adds.

Chris Schenk, director of research for the Ontario Federation of Labour, says appointing the commission is “a promising development,” although, he says, “it looks as if the terms of reference were drafted on Bay Street rather than on Main Street.”

Among other things, Schenk says, he would have liked to have seen some discussion of how pension plans regulated by the province relate to public pension plans such as the CPP and OAS. But, as Perkin does, he praises the composition of the commission.

Panel members who will provide expert technical support are:

> Bob Baldwin, a consultant and former research director at the Canadian Labour Congress who specializes in pensions, aging society and labour market issues;

> Kathryn Bush, a lawyer in the pension and employee benefits group of Blake Cassels & Graydon LLP, and a former vice chairwoman of the Financial Services Tribunal and the Pension Commission of Ontario;

> Murray Gold, a lawyer with Koskie Minsky LLP who practices in pension and employee benefits and related insolvency law;

> Ian Markham, director of pension innovation at Watson Wyatt Worldwide, an actuarial consulting firm.

The panel has been asked to concentrate on: pension plan funding and surplus; a pension benefits guarantee fund; full and partial windups, plan splits and mergers; asset transfers between pension plans; and the funding of defined-benefit multi-employer pension plans.

Ontario Finance Minister Greg Sorbara has outlined six key principles to guide the commission’s work that, he says, “will ensure that plan members and pensioners know that their contributions are protected by a modern set of rules and that Ontario remains a competitive place to do business.”

Sorbara says the review will focus on:

> the importance of maintaining and encouraging the system of DB pension plans in Ontario;

> the importance of maintaining affordability of DB plans for both members and sponsors;

> the importance of pension plans in supporting a competitive economy;

> the need to safeguard the security of pension benefits;

> the need to balance the rights and obligations of employers, plan members and pensioners;

> the impact of demographics and the changing nature of the workplace on the provision of employment pensions.

With more than 7,500 pension plans registered in Ontario and more than two million plan members, Ontario regulates more pension plans than any other jurisdiction in Canada. Fifty-one per cent of these plans are DB plans, covering 83% of plan members in the province.

But Paul Forestell, leader of the Canadian retirement professional group at Mercer Human Resource Consulting in Toronto, says that, while the new commission report may be influential, other jurisdictions are already well down the road to making changes in their pension regulations. Up until now, Ontario has been absent from what has been happening at the national level, he says.

Forestell adds that the timing of the announcement is unfortunate as it postpones changes for several years.

“The pension situation in Ontario is precarious,” he says. “Both the funding issues that exist with DB plans and the legal environment in which they operate are causing plan sponsors to question whether they should be in DB plans.”

@page_break@Forestell would like to see clarity on the issue of surplus and deficits in pension funding. “The asymmetry that exists right now in the system is untenable and can’t continue,” he says. “There should be symmetry. Whoever is responsible for deficits should get the benefit of surpluses.”

Perkin notes the issue of asymmetry is also important for the ACPM. The organization also believes that changing demographics and the retirement of the baby boomers will have a significant impact on the retirement income system and must be considered by the commission.

But the OFL’s Schenk says the Ontario government has put off having to answer the question of why more workers don’t have DB pension plans that they can count on in their retirement years. He concedes that some recent court rulings have tied the hands of pension plan administrators in ways that are “perhaps overly stringent.”

Schenk suggests that the commission could generate new perspectives on these issues and, at the same time, propose improvements for pension plan members: “There’s room for compromise on some issues.” IE