Pension legislation reform is urgently needed in Ontario in order to enable employers to improve their competitiveness, while giving employees a predictable retirement income, says the Ontario Chamber of Commerce.

In an appearance before the Ontario Expert Commission on Pensions, the Ontario Chamber of Commerce (OCC) explained that defined benefit pension Pbans are quickly becoming unsustainable.

Winston Woo, director of taxation and pensions with AGS Automotive Systems, and acting chairman of the OCC finance committee, describes current funding rules as unduly burdensome on employers, “It’s like having to pay off a mortgage in 5 years versus the conventional 25 year term.”

The OCC acknowledges that DB plans provide a predictable retirement income for employees, and are a complementary tool in the attraction and retention of talent by businesses.

Yet, short-comings in the current legislation and the sharp decline in long-term interest rates to historically low levels, have led to sizeable solvency deficiencies and funding issues for most DB pension plans, it says.

“Today’s excessive funding requirements force employers to divert significant cash flow away from capital upgrades, research and development, and basic maintenance in their operations, into pension funding,” explains Len Crispino, president & CEO of the OCC. “This puts downward pressure on businesses, and could negatively impact growth in the Ontario economy.”

The OCC pensions task force has recommended that the Ontario government amend the pension legislation to:

  • Promote voluntary increased pension funding and the re-establishment of full funding in an orderly manner for existing pension plans;
  • Eliminate partial plan terminations and “grow-in” benefits;
  • Relax solvency funding requirements by establishing a “normalized interest rate” of 6.5% and extending the amortization period to 15 years;
  • Allow businesses running DB plans access to funding excesses; and
  • Reduce administrative burden.



The OCC also called on the Ontario government to create a framework for “multi-participant” DB pension plans which would give small and medium sized companies, with limited capacity of running their own plans, access to a smart tool for attracting and retaining skilled labour.

A full copy of the OCC presentation can be found at www.occ.on.ca.