OPTrust submits recommendations on proposed Pension Benefits Act changes

posting date Posted: April 20, 2010

Toronto (April 20, 2010) – The OPSEU Pension Trust (OPTrust) has made a number of recommendations to the legislative committee that is reviewing proposed amendments to Ontario’s Pension Benefits Act.

The proposed amendments to the PBA are set out in Bill 236, which was introduced in the provincial legislature on December 9, 2009.

OPTrust’s submission focuses on changes that would potentially provide new options for the transfer of employees’ pension assets between pension plans in cases where employees are transferred from one employer to another as a result of a divestment.

If adopted, the bill would provide additional options for:

  • avoiding the division of employees’ pensions between two separate plans as a result of future divestments, and
  • consolidating into a single plan the pensions of eligible employees who were affected by a past divestment. 

For pension purposes, a divestment occurs when one or more employees are transferred from their original employer to a successor employer that provides a different pension plan as a result of a transfer or sale of business.

Under Ontario’s current legislation, when a divestment occurs, the employee’s previous pension entitlement remains with the original pension plan. However, for service after the divestment, the employee contributes to the successor employer’s plan. When the employee ultimately terminates or retires, they receive benefits from both plans.

Bill 236 includes proposed changes that would allow the negotiation of pension transfer agreements that would avoid these divided pensions. The bill also includes a temporary measure that would permit transfer agreements for eligible members who have been affected by past divestments.

OPTrust’s recommendations include:
  • Expanding the new transfer provisions in Bill 236 to allow the option of consolidating employees’ past and future service in either the original pension plan or the successor plan, whichever plan provided the best value to the employee. This option would be available in the case of divestments involving jointly sponsored pension plans (JSPPs) – including the OPSEU Pension Plan – or multi-employer pension plans (MEPPs).
  • Amending the proposed transfer agreement provisions to ensure a balanced approach to the funding implications of any transfer arrangement involving JSPPs or MEPPs. This would help protect the pension interests of all members in pension plans that are affected by past or future divestments.

OPTrust’s submission also offers comments on a number of technical issues regarding asset transfers. These include the need to clarify how transfer values are to be calculated and the treatment of a surplus and/or deficit in either pension plan involved in a transfer agreement.

Bill 236 reflects a number of recommendations made by Ontario’s Expert Commission on Pensions in 2008. Other changes in the bill that are not addressed in OPTrust’s current submission include:

  • immediate vesting for new members of defined benefit pension plans
  • a “grow-in” provision for plan members who are laid off, and the elimination of partial plan wind-ups
  • a provision allowing pension plans to offer a phased retirement option.

The government has announced plans to introduce further measures to address other recommendations of the Expert Commission later this year.

The final details of the amendments proposed in Bill 236 and how they may affect OPTrust members will not be known until the final legislation is passed and the necessary regulations released.

For more information: