Over the next 20 to 25 years, the number of seniors in Ontario will more than double to 3.5 million. This large increase will pose unique challenges to our province’s pension coverage and income adequacy in retirement.
That is why the McGuinty government has undertaken a number of steps to modernize the employment pension system. These include providing temporary solvency funding relief to protect jobs and families, simplifying rules for dividing pensions when a marriage ends, establishing an Advisory Council on Pensions and Retirement Income, and starting consultations with the Canadian Institute of Actuaries to develop new pension funding rules.
We also created the Expert Commission on Pensions, which conducted an independent review of the Pension Benefits Act. It held numerous public hearings, received 127 submissions – including the input of CARP – and commissioned 17 research projects.
Building on the commission’s recommendations, we recently introduced a pension reform package, which is part of our plan to strengthen and modernize Ontario’s employment pension system, with the first real reform in more than 20 years.
If passed, the Pension Benefits Amendment Act, 2009 would:
? extend the benefits of plan members affected by layoffs and eliminate partial wind-ups. A partial wind-up occurs when only part of a pension plan is closed;
? encourage the restructuring of pension plans affected by corporate reorganizations, while protecting benefit security for plan members and pensioners;
? increase transparency and access to information for plan members and pensioners;
? enhance regulatory oversight; and
? improve plan administration and reduce compliance costs.
The proposed reforms would help the pension system adapt to economic changes while balancing the need for benefit security.
There is still much work to be done to modernize Ontario’s pension system, and the McGuinty government will be further addressing these points with the introduction of another pension reform bill in 2010.
We are also engaging our provincial and federal counterparts to encourage an open national debate on this important issue. We understand the complexity of the issues, which is why we are proposing a balanced approach. Provincial and territorial finance and pension ministers will be meeting in Whitehorse shortly to discuss research that was commissioned on the state of the retirement income system. And Premier McGuinty continues to call for a pension summit, which would provide an opportunity to discuss these challenges.
Of course, one of the most important things we can do to improve the pension system in Ontario is to encourage growth in the economy. Better jobs and paying less taxes means that Ontarians can provide greater financial support to their aging relatives, as well as save for their own retirement. That is why we recently introduced our comprehensive tax reform package, which will see tax cuts for Ontario individuals and businesses, and the replacing of the retail sales tax with the Harmonized Sales Tax (HST). These measures, when taken together, will provide Ontario with an additional 591,000 net new jobs, an increase in annual incomes of up to 8.8 per cent for Ontarians and increased capital investment of $47 billion.