February 27, 2009
The Honourable Dwight Duncan
Minister of Finance
Attention: Comments on Report of the Expert Commission on Pensions
c/o Pension and Income Security Policy Brunch
Floor, Frost Building South
7 Queen's Park Crescent
Toronto, ON M7A 1Y7
Dear. Mr. Duncan:
Re: Ontario Expert Commission on Pension Report
Thank you fur the opportunity to comment on the above noted report. We are encouraged by the comprehensiveness of the report and recommendations. We are concerned, however, that the report does not provide sufficient support during this significant economic period for single-employer pension plans (SEPPs).
The Free Methodist Church in Canada, as a pension plan sponsor. has a Single Employer Pension Plan (SEPP) that shares many of the characteristics of Multi Employer Pension Plans (MEPPs) and Jointly Sponsored Pension Plans (JSPPs) such as having a negligible chance of ceasing operations and having the support of nearly 150 individual separately operated local churches across Canada. We arc concerned that, unlike the United States where solvency funding obligations are exempt, church denominations such as ours continue to be required to fund solvency deficiencies that will likely never materialize, and also require us to contribute to the Ontario Pension Benefits Guarantee Fund that we will never likely use.
We would recommend that provision be made for church denominations or other not for profit charities that sponsor SEPPs to eliminate the solvency funding obligations (consistent with US guidelines for churches). Alternatively. we would ask for complete solvency relief as has been made for Specified Ontario Multi Employer Plans (SOMEPPs), but extend the relief for all categories of pension plans for a period of at least 5 years provided no more than 25% of members formally object. Lastly we would ask that consideration be made to exempt church denominations or other not for profit charities that sponsor SEPPs from being required to participate in the Ontario Pension Benefits Guarantee Fund.
It is understood that Ontario has provided SEPPs the opportunity to amortize the funding of solvency deficiency amounts over 10 years instead of 5 years. Given market performance to December 31, 2008 and beyond this does not provide sufficient relief as many plans such as ours have gone from a near 100% funded ratio to below 80% solvency funded ratio all in the span of a single year. The timing of potentially significantly higher pension costs to local churches, at a time when many churches are facing financial challenges themselves as members face unemployment and other adverse economic influences is not in our collective best interests.
Thank you for your consideration.
Original signed by
Mark Molczanski, CA. CFP, FMA
Director of Administrative Services