Letter from William D. Anderson to Minister of Finance
October 5, 2010
Via Fax and Mail
The Honourable Dwight Duncan
Minister of Finance
7 Queen's Park Crescent, 7th floor
Toronto, ON M7A 1Y7
Our File No. 100755
We recently wrote to you on September 15, 2010 setting out MEBCO’s concerns pertaining to the Government’s Announcement on August 24, 2010 respecting steps to strengthen Ontario’s pension system.
Since September 15, 2010, we have come to understand that the Ministry is preparing to sign the CAPSA Proposed Agreement Regarding Multi-Jurisdictional Plans in the near future.We are very concerned that Agreement contains provisions adverse to multi-employer pension plans (MEPPs), especially in the context of Ontario's permanent solvency exemption for MEPPs.
We agree that the current situation concerning multi-jurisdictional pension plans is somewhat uncertain, and that the CAPSA Agreement would add some level of certainty to the situation.However, the CAPSA Agreement was negotiated amongst the various jurisdictions when no jurisdiction had any permanent solvency funding exemption for MEPPs.The CAPSA Agreement does not therefore deal adequately with multi-jurisdictional MEPPs.In fact, although the CAPSA Agreement would add certainty, that certainty will lead to the certain disadvantage of Ontario members.
Under the proposed CAPSA Agreement, Ontario MEPP members would rank at the bottom tier of protected benefits in any situation in which a multi-jurisdictional plan's assets are divided by jurisdiction.This disadvantage is particulary sharp in the context of a permanent solvency exemption in Ontario, and would be profoundly destabilizing to multi-jurisdictional MEPPs.We certainly do not believe that Ontario would have knowingly negotiated an agreement that would be to the detriment of Ontario members.
Accordingly, MEBCO strongly believes that the provisions of the Announcement and the provisions of the CAPSA Agreement need to be reviewed and reconsidered in the context of a permanent solvency funding exemption for MEPPs.That fix may be as simple as the implementation of the current ad hoc system which applies the funding rules of the major authority.
MEBCO therefore urges you to take steps to ensure that the CAPSA Agreement is not signed on behalf of Ontario until a full review and reconsideration is completed, which takes into consideration a permanent solvency funding exemption for MEPPs.If the CAPSA Agreement is signed by Ontario in its current form, this may lead to greater certainty, but greater certainty which will negatively impact Ontario members by requiring immediate plan splits and benefit reductions.
This is therefore a matter of the utmost seriousness to the hundreds of thousands of members of multi-jurisdictional MEPPs registered in Ontario.We have listed below a number of multi-jurisdictional MEPPs registered in Ontario, whose combined membership of 610,000 members would be extremely adversely affected by the Announcement and the current form of the CAPSA Agreement and who have specifically endorsed the submissions in this letter.
We would be pleased to meet with you at your earliest convenience to discuss this matter further.
William D. Anderson
Multi-Employer Benefit Plan Council of Canada
* includes active, retired and deferred vested members
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