(December 22 – 11:10 ET) – Ontario Finance Minister Ernie Eves has announced that early in 2001 the Ontario government will hold a public consultation on new pension surplus sharing rules under the Pensions Benefits Act.

The Ministry of Finance says that recent court decisions have changed the way pension surplus sharing arrangements are negotiated in Ontario. A divisional court decision in May 2000 limited the ability of employers and employees to negotiate surplus sharing arrangements.

Employers must now demonstrate that the documents that created the pension plan clearly entitle them to pension surpluses. Many pension plans, particularly older plans, do not contain such provisions.

When pension plans wind up due to a company closing or a merger with another organization, surplus sharing agreements are negotiated between employers and employees. The current regulation under the Pensions Benefits Act prohibits employers from withdrawing a surplus from defined benefit pension plans without first obtaining the consent of two-thirds of its pension plan members and pensioners.

“The consultation will help the province to determine overall requirements for pension surplus sharing which are fair to all parties and provide greater legal certainty,” Eves said.

Until this review is complete and new legislation is drafted, the government has extended the existing provisions for pension surplus sharing until December 31, 2001 to preserve the status quo.
-IE Staff