Appendix One — Terms of Reference


The Government of Ontario is establishing an Expert Commission to examine the legislation that governs the funding of defined benefit pension plans in Ontario, the rules relating to pension deficits and surpluses, and other issues relating to the security, viability and sustainability of the pension system in Ontario. The Minister of Finance will appoint a Chair of the Commission and an expert and representative Advisory Panel to assist the Chair in his or her deliberations.

The Chair of the Commission will be authorized, with the assistance of the Advisory Panel, to prepare a report to the Minister of Finance that will be guided by the following key principles, take into account the following factors and make recommendations on the following issues:

Guiding Principles

The Expert Commission should observe the following principles to guide the process:

  • the importance of maintaining and encouraging the system of defined benefit pension plans in Ontario;
  • the importance of maintaining the affordability of defined benefit pension plans for both members and sponsors;
  • the importance of pension plans in supporting a competitive economy;
  • the need to safeguard the security of pension benefits;
  • the need to balance the rights and obligations of employers, plan members and pensioners; and
  • the impact of demographics and the changing nature of the workforce on the provision of employment pensions.

Factors to Consider

The Expert Commission should consider the following factors in its deliberations:

  • the need to encourage the appropriate funding of pension plans and acknowledge the connection between surplus and funding;
  • recent case law and its implications for employers, plan members and pensioners;
  • the need to avoid costly litigation regarding pension surplus issues;
  • the desirability of facilitating negotiations between employers, plan members and pensioners, and balancing their interests in the surplus withdrawal process;
  • the risks and obligations assumed by employers, plan members and pensioners in defined benefit pension plans;
  • developments in other Canadian jurisdictions and the harmonization of pension laws in Canada; and
  • that recommendations should be practical, affordable and implementable.

Issues to be Addressed in the Report

Pension plan funding:

  1. the adequacy of regulatory tools, existing reporting rules and timing of required actuarial valuations
  2. the rules governing the payment of going concern unfunded liabilities and solvency deficiencies
  3. the effect of indexation and other non-pre-funded benefits on a plan's funded status
  4. the impact of funding rules on the Pension Benefits Guarantee Fund
  5. the funding of multi-employer pension plans

Pension plan surplus:

  1. surplus rights and deficit obligations
  2. surplus distribution from defined benefit pension plans on full and partial wind up, and from continuing plans
  3. reductions or suspensions of contributions (contribution holidays) to defined benefit pension plans

Pension Benefits Guarantee Fund:

  1. coverage, assessments and allocations from the fund
  2. its role in providing security of pension benefits to plan members and its continuing viability

Pension plan wind-ups:

  1. benefits added by law
  2. the determination of a partial plan wind-up
  3. plan wind-ups when an employer is in deficit
  4. unlocated beneficiaries

Pension plan splits and mergers:

  1. the allocation of plan surpluses and deficits following mergers and divestments
  2. pension asset transfers involving groups of employees


  1. pensions as an important policy instrument that supports workforce attachment and fosters an entrepreneurial economy
  2. any other matters relevant to enhancing the viability of defined benefit pension plans in Ontario

The Proceedings of the Expert Commission

The Chair of the Expert Commission shall, as part of his or her review, engage in public meetings or hearings and solicit written input from a wide range of interested stakeholders or their representatives on issues affecting the reform of Ontario's regulatory pension framework.

The Chair of the Expert Commission will meet on a regular basis with the Advisory Panel. The Chair may obtain paid advice from actuarial, legal and financial experts, and may commission research papers, as required. The Chair will have staff to assist with the consultation process, coordinate research projects, assist in the drafting of recommendations and perform other required duties.

If requested by the Chair of the Expert Commission, the Deputy Minister of Finance and the Superintendent of the Financial Services Commission of Ontario will assist the Chair and the Advisory Panel in carrying out their duties and functions.

Term of the Chair and Advisory Panel

The Chair and the Advisory Panel will conduct this review from the fall of 2006 to the summer of 2008.


The Chair will provide:

  • regular updates to the Minister of Finance; and
  • a final report to the Minister, due summer 2008 or such later date as the Minister may approve.

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