Old Wine In New Bottles: Ontario's 2016 Budget Re-Announces Previous Pension And Benefit Proposals

Each year, we pension and benefit lawyers watch Ontario's Budget announcement intently. We ask: "Will this be the year for blockbuster, sweeping announcements on changes in pension and benefit policy?" For 2016, the answer is a decided "no". Largely, this year's Ontario Budget recommitted to a number of previously announced proposals. This alert briefly summarizes the Ontario 2016 Budget tabled February 25, 2016, entitled "Jobs for Today and Tomorrow" (the "Budget") and the corresponding Budget Bill, Bill 173, Jobs for Today and Tomorrow Act (Budget Measures), 2016.

The Budget is the Government's self-described initiative to keep itself "accountable" for previously announced pension initiatives, with some of these initiatives having been introduced more than five years ago. In addition, the Government made new announcements regarding drug benefits for seniors, which some Ontario employers will want to review carefully. The table below outlines the proposals and deadlines that the Budget's pension and benefit portions set out.

Initiative Timeline What does this mean for employers/administrators now? Pension-Related Announcements Eliminate "30% Rule" The 30% Rule prohibits plan administrators from directly or indirectly investing plan assets in securities of a company to which are attached more than 30% of the votes that elect the directors of the company. Unannounced For plans that have already implemented structures to make investments in companies in a manner that complies with the 30% Rule, administrators may wish to consider mechanisms to unwind or streamline those structures. In our view, most administrators ought best to wait until the actual legislative wording to eliminate the 30% Rule has been introduced before proceeding to unwind existing structures or planning on taking additional stakes in companies. For example, we do not yet know if elimination of the 30% Rule will have any conditions (including being limited to certain plans or certain types of investments). We further emphasize that this change will not affect plans registered outside of Ontario. Release final report reviewing the mandates of the Financial Services Commission of Ontario (FSCO), the Financial Services Tribunal (FST) and the Deposit Insurance Corporation of Ontario (DICO) On November 4, 2015, an Expert Review Panel appointed to review the FSCO, FST and DICO mandates released its Preliminary Position Paper. Among other things, the Paper recommended the establishment of a new regulatory agency called the Financial Services Regulatory Authority (FSRA) to replace both FSCO and DICO. The Pension Benefits Guarantee Fund would be administered and overseen by an entity that is separate from, but accountable to, the FSRA. The paper further recommends that the FSRA be given the authority to make...