Ministry of Finance calls for consultation on Pension Benefit Act Regulations

The Ministry of Finance has called for consultation on their proposed regulations covering the conversion of Single Employer Pension Plans to Jointly Sponsored Pension Plans.

As you may remember, the Solvency Relief Application filed by Ontario Northland back in 2011 contained the following under

D2 Framework for Change

(the last bullet)  Commitment to continued exploration of greater sharing of risk and governance through conversion to joint sponsorship for future service.

There were other measures contained in that application, one of which was increased contributions, which the unions and the company subsequently agreed to.  In Aug of 2014, I asked the company the following

Q.  Is the company still committed to all the other items in Section D2 of the Solvency Relief Application?

A.  The group that made the recommendation used the framework in D2 in their analysis of the various alternatives to achieve a more sustainable plan.  In the end it was determined that increasing employee contributions would be sufficient to meet the funding target.  The health of the plan will continue to be monitored and if it is determined that further action must be taken then we will bring back the committee that made the initial recommendation and have them look at alternatives and make a recommendation.

I am working with CFP to determine what is our best response to this call for consultations and will update in the near future.  We need to respond quickly as the call for consultation has a deadline of Feb 27th.

Any input would be greatly appreciated  Thank you

 

Phil Koning

Chair ONPA

 

Long awaited ONTC Pension Plan valuation as of Jan 1, 2014

HR Director Glenn Zabarelo provided a copy today of the Actuarial Valuation as of Jan 1, 2014 which the ONPA requested on Jan 2, 2015 after it was finally ready for publication. Unfortunately the report shows the fund is still in a deficit position as of Jan 1st of last year.  It appears that the pension fund has a going concern deficit of almost $58M and a unfunded solvency liability of $152M.  There is a lot of information in the valuation and we will be preparing questions to clarify exactly what it all means in relation to our pensions.

On the good news front, the Mortality Table was changed from 1994 to a more uptodate assessment of longevity as of 2014 and the discount rate for investments was lowered from 5.70% to 5.40%, which is more reflective of todays investment environment.  These changes will help to ensure sustainability in the long term, but they have a cost associated to them, and it appears that even with the Solvency Funding Relief ONTC will be required to make special payments in the future.

While we may feel this is only appropriate given the actions of the company in the past, it does put more pressure on the sustainability of the organization and our best protection for our pensions is the ongoing operation of the company.   There are many regulatory changes coming and we will continue to monitor and provide input to those changes as we go forward.

If you have the time to go through the document, I would suggest you forward any questions you may have to me at ONPABoard@outlook.com and we will include them to avoid duplication.  We will post both the questions and the answers when they are available.

 

Phil Koning

Chair ONPA

Public Pensions are at Risk

Articles like this are the reason we need your membership to ensure we have a strong voice.  Although many pensions are being rendered unsustainable by low contribution rates and poor governance, most plans at risk are there because during the boom times, regulators insisted on contribution holidays and sponsors dipped into the funds for purposes not originally contemplated.  We recognize that longer lifespans and lower than anticipated ROI’s are going to have an effect on the fund’s performance, but we need to speak out on behalf of the members whose contributions have already put the fund in a position where investment income is providing all of the current pension payouts.

Please consider filling out an application and joining the ONPA

Thanks