Ontario Private Member's Bill 54 Adds to Pension Coverage Debate
Recently, much of the debate on Canada’s retirement system has focused on ensuring that as many Canadians as possible have access to some form of pension plan through increased retirement savings coverage. Proposals ranging from government led initiatives such as expanding the Canada Pension Plan (CPP) or creating a supplemental CPP (PDF) to taking steps to promote new pension plan designs in the private sector, such as industry-wide plans, have all been put on the table.
Ontario Bill 54, An Act respecting retirement savings plans for employees and for self-employed persons, (PDF) a private member’s bill introduced earlier this month, attempts to move this discussion forward by proposing amendments to the Ontario Pension Benefits Act to enable insurers and financial institutions to establish defined contribution pension plans for one or more unrelated employers or classes of employers. (Sole proprietorships and partnerships could also register as participating employers in such a plan.) While members would be required to make contributions, employer contributions would be voluntary. Income Tax Act changes would also be required.
Bill 54 goes on to propose amendments to the Ontario Employment Standards Act, which would require all employers with 20 or more employees to provide some form of retirement savings plan – one option available to such employers being the proposed insurance industry plans.
While private members’ bills do not, as a rule, become law, Bill 54 has passed second reading and was referred to the Standing Committee on Finance and Economic Affairs on May 13, 2010.
While it seems unlikely in these circumstances that the Ontario government will enact any legislation that would make retirement plans mandatory, by referring Bill 54 to Committee, the Ontario government may be signalling its interest in exploring this aspect of the coverage issue in greater detail. This is consistent with the Ontario Budget announcement, indicating that the government plans to continue studying the various options to expand pension coverage and engaging the public in further consultations.
Given that the federal and provincial governments appear to be moving away from proposals to expand or supplement the CPP, initiatives to increase the types of pension plans offered by the private sector (whether through new insurance industry-based plans or expanding the role of existing large, sophisticated plans to enable them to manage funds and/or provide plan administration services on behalf of other unrelated pension plans or organizations) may be emerging as the front-running solution to the coverage issue.
