Top Five Developments In Pensions And Benefits Law

The pension and benefits landscape continues to evolve. With the election of a Liberal majority government in Ontario, it appears that retirement programs will be a key focus for the next several years. Here are a few of the most noteworthy developments to keep an eye on for 2015:

1. Rethinking Investment Rules: Following the Money

   The Ontario government introduced changes to the investment rules under the Ontario Pension Benefits Act (PBA) for Ontario registered pension plans. Some of the notable revisions include:

   securities issued and fully guaranteed by the Government of the United States are no longer subject to the 10% rule;1 pension plan investments in eligible Ontario public infrastructure projects may no longer be subject to the 30% rule;2 and effective January 1, 2016, pension plan administrators will be required to file their Statement of Investment Policies and Procedures (SIPP) with the Financial Services Commission of Ontario, and disclose whether, and if so, how, their SIPP addresses environmental, social or governmental factors. The changes to the investment rules are aimed at both increasing the use of "safe" securities that are linked with inflation and stimulating investment in Ontario's economy. The latter amendment is in response to plan members and administrators' increasing use and awareness of the principles of social responsibility and transparency in plan investment. Plan administrators will need to review and revise their SIPPs in order to comply with these requirements by January 2016.

2. Alternative Plan Designs: Trying Something New

   Target benefit pension plans (TBPs) and Pooled Registered Pension Plans (PRPPs) are two notable pension design developments that will continue to gain momentum in the coming months.

   PRPPs are large-scale defined contribution pension plans intended to lower pension costs for both members and employers by leveraging economies of scale. This plan design was introduced federally in 2012 through the Pooled Registered Pension Plan Act. Alberta, British Columbia, Nova Scotia, and Saskatchewan have already adopted parallel provincial legislation and, in late 2014, Ontario introduced Bill 57 to incorporate PRPPs into its provincial pensions framework.

   TBPs are an alternative to traditional defined benefit and defined contribution plans. Under TBPs, both employer and employee contributions are fixed. While such plans are designed to pay a target benefit on retirement, accrued and future...