Retirement Security – Ontario Budget 2011

March 29, 2011 – Pension reform has been an active issue in 2010. And while proposals for private sector administered Pooled Registered Pension Plans (PRPPs) deflated hopes for meaningful change, the Ontario government promises to press forward with a number of reforms, even if the 2011 Ontario budget omits pension issues entirely.

The government nevertheless took the opportunity to remind citizens what it has done so far and what it promises to do yet.

So far, Ontario’s concrete action on retirement issues has largely focused on important – if small – tweaks. The biggest of these, are the Pension Benefits Amendment Act, 2010, and the Securing Our Retirement Future Act, 2010.

These two new acts modernize funding rules, clarify pension plan surplus rules, and extend the benefits of plan members affected by lay-offs, among other moves. In effect, the Ontario government has so far focused on shoring up and clarifying existing rules and regulations rather than moving forward with large-scale initiatives.

Modernizing an outdated pension system is important, but it doesn’t address the larger issues of pension plan coverage and savings adequacy. On that front, the Ontario government seems credibly committed to pushing forward.

In particular, Ontario is still committed to modest CPP expansion, along with most provinces other than Alberta, Quebec, and fence sitting Saskatchewan. As a national issue, however, CPP expansion can’t happen without near unanimous consent of the provinces, and optimism that the provinces will come to terms is fading fast.

Similarly, the Ontario government is working with the federal government and other provinces to implement the PRPP’s, which may yet prove to be better than nothing, but are far from an adequate solution to a large problem.

CARP is on the record on pension reform issues. We’ve stated that the core goal of any country’s pension system is to provide an adequate system available to the full breadth of the population that is sufficient to prevent poverty in old age. It must be affordable by the employers and employees and other participants and robust enough to withstand major shocks, including economic, demographic, and political volatility. Recent events have demonstrated that Canada’s retirement system is not meeting this goal in part because of inadequate pension coverage. Moreover, tweaks and promises on future action aren’t addressing the real problems.

Recent activity on the pension reform front in Ontario is certainly encouraging, but reform must still move from small-scale adjustment and commitments into the territory of real and meaningful policy change. If Ontario, like a number of other provinces, can’t find willing partners in other provinces or the federal government, then perhaps its time to stand apart and lead.

Keywords: PRPP, CPP, pension reform, poverty