What's New in Pension and Benefits – January 2021

  • January 27, 2021
  • Michael Long and Simon Laxon, Willis Towers Watson

  1. LEGISLATION

ONTARIO EXTENDS INFECTIOUS DISEASE EMERGECY LEAVE

Ontario has extended, from January 2 to July 3, 2021, the period under which Infectious Disease Emergency Leave (IDEL) can be taken. Under the IDEL regulation, non-unionized employees will be deemed to be on an IDEL if their work hours will be or already have been temporarily reduced or eliminated due to COVID-19 since on or after March 1, 2020. These employees will not, therefore, be automatically terminated based on the regular temporary layoff rules under the Employment Standards Act, 2000.

ONTARIO BUDGET

On November 5, 2020, the 2020 Ontario Budget was tabled and Bill 229, Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020, introduced.

Bill 229 amended provisions under the Pension Benefits Act (PBA) relating to target benefit plans (though the provisions are not yet in effect) and re-enacted several PBA provisions that are not yet effective but would, otherwise, have expired because they have not been proclaimed into force 10 years after being passed (these provisions would still have to be proclaimed into force).

Bill 229 also repealed the Financial Services Commission of Ontario Act, 1997 and made minor procedural revisions to the Financial Services Regulatory Authority of Ontario Act, 2016. This completes the transition from FSCO to FSRA.

The Budget notes that the next mandated review of the Pension Benefits Guarantee Fund will be completed by May 2021 and reported in next year’s Budget, and that certain smaller public pension plans are going to be consolidated with larger plans.

FEDERAL PENSION PROPOSALS

The Department of Finance has released a consultation paper on possible changes to the regulation of federally regulated private pension plans. The submission deadline ended on January 14, 2021.

The government has set out several options with respect to funding relief including extending amortization periods, increasing the letter of credit limit, and allowing alternative methodologies for solvency valuations. It also proposes a process for seeking special relief.

There are several suggestions for strengthening the regulatory framework, including improving plan governance by, for example, requiring that members and retirees be represented by trustees, requiring governance and funding policies, and allowing deemed consent for communicating electronically. Solvency Reserve Accounts are being considered for single employer defined benefit plans as are variable payment life annuities, which would allow a defined contribution plan (or a pooled registered pension plan) to pool investment and longevity risks and pay out a stream of lifetime pensions.