BMKP Law Summary: 2023 Ontario Economic Outlook and Fiscal Review
November 07, 2023
The 2023 Ontario Economic Outlook and Fiscal Review (the “Statement”), recently released by the Ontario Government, includes various pension-related topics. This article provides a concise summary of these topics, including the introduction of target benefit pension plans, acknowledgment of the Canada Pension Plan’s (“CPP”) significance, the province's dedication to infrastructure development, and clarification regarding asset pooling within the broader public sector.
- Implementing a Target Benefit Framework
The Statement confirms that Ontario is working on establishing a regulatory framework for target benefit pension plans. These plans aim to provide a predictable monthly income in retirement at a fixed cost to employers. Through consultations in March and September 2023, the Ontario Government has been engaging with the pension sector in Ontario to develop regulations for the framework. The Statement indicates that the framework to be established will enhance plan sustainability, funding, governance, transparency and member engagement, thus safeguarding retirement security and encouraging more individuals to pursue careers in skilled trades. The Statement does not set a timeframe for the establishment of the target benefit pension plan framework.
- Recognizing the Importance of the CPP
The Statement emphasizes the significance of the CPP in the national retirement system. The Statement provides that the CPP offers sustainable, predictable, and portable pensions for all Canadians, regardless of their work and retirement locations. Ontario supports the CPP's role in ensuring retirement security for all Canadians.
- Launching the Ontario Infrastructure Bank (the “Bank”)
The Statement recognizes that taxpayers alone cannot finance the infrastructure required for the province. To address this, the Ontario Government intends to establish the Bank would facilitate the participation of public sector pension plans and institutional investors in infrastructure projects across the province. The Statement indicates that the Bank's focus would include long-term care, energy infrastructure, affordable housing, municipal and community infrastructure, transportation, and projects benefiting Indigenous communities. The Statement hasn't given a specific timeline for launching the Bank, which will be set up as a provincial agency.
- Pooling of Assets of Broader Public Sector Funds
The Investment Management Corporation of Ontario (“IMCO”) offers pooled asset management services to Ontario's broader public sector, which includes municipalities. Municipalities opting into the Prudent Investor Standard under the Municipal Act, 2001, allowing for more investment options, are mandated to delegate their investment authority to an investment board or a joint investment board. The Ontario Government is currently proposing an amendment to the Investment Management Corporation of Ontario Act, 2015, with the purpose of clarifying that both municipal investment boards and joint investment boards are eligible to become members of IMCO.
Click on more information below to read the full economic statement:
