Ontario proposes pension reform and free prescription drug coverage for children and youth
An in-depth look at these and other subjects are covered in the current issue of the Morneau Shepell News & Views
TORONTO, May 18, 2017 /CNW/ - Morneau Shepell released the May 2017 issue of its monthly newsletter, News & Views, in which the company looked at a number of topics including the following: potential amendments to pension plans in Ontario and Quebec, OHIP+ to provide free prescription drug coverage for children and youth, a new mortality improvement scale, and more.
- Ontario budget includes pension reform – As part of the Ontario budget announcement on April 27, 2017, the provincial government indicated its plans to reveal the guiding principles of the new solvency funding framework, its proposed target benefit multi-employer pension plan, and its intention to develop regulations that will facilitate the implementation of variable benefits from defined contribution pension plans. The government also introduced Bill 127, which includes amendments to the Pension Benefits Act that further enhance the powers of the Superintendent of Financial Services.
- OHIP+ proposes free prescription drug coverage for children and youth – The Ontario government introduced OHIP+: Children and Youth Pharmacare – the first program of its kind in Canada – which proposes free prescription drug coverage for four million children and youth aged 24 and under in Ontario. If approved, the program would be effective January 1, 2018 and would ensure there are no out-of-pocket drugs covered under the Ontario Drug benefit program.
- New mortality improvement scale – A task force composed of pension plan experts and actuaries issued a draft Task Force Report on Mortality Improvement that created a new two-dimensional mortality improvement scale to assist in Canadian actuarial work. The new scale, based on data from 2015, assumes an increased life expectancy rate and its impact on pension values. Members of the Canadian Institute of Actuaries are required to comment on the draft report by June 30, 2017.
- Potential amendments to pension plans in Quebec – In Quebec, a draft regulation was published in April to amend some of the rules for member-funded pension plans (MFPP). The proposed changes – including eliminating solvency funding, eliminating the rule that requires the plan be solvent before pensions can be indexed and funding the plan without taking future indexation into account – are expected to increase the popularity of MFPPs.
- Changes to maximum amount of a letter of credit – In April, the federal government proposed changes to the Pension Benefits Standards Regulations 1985 that could change the maximum amount of a letter of credit for federally regulated defined benefit pension plan from 15 per cent of assets to 15 per cent of solvency liabilities.
- Governance, investment and funding policies in Alberta – A new draft of the Interpretive Guideline #12 – Governance, Investment and Funding Policies is open for public comments until June 30, 2017. The revised version issued by the Alberta Treasury Board and Finance provides more information about the regulator's expectations, including the guidance that a plan administrator can establish a code of conduct and conflict of interest policy into the governance policy.
- Tracking the funded status of pension plans as at April 30, 2017 – Morneau Shepell shared the changes in the financial position of a typical defined benefit pension plan since December 31, 2016. The graph in the newsletter shows the impact of three typical portfolios on plan assets and the effect of interest rate changes on solvency liabilities of medium duration.
- Impact on pension expense under international accounting as at April 30, 2017 – Morneau Shepell shows the expense impact for a typical pension plan that starts the year at an arbitrary value of 100 (expense index). Since the beginning of the year, the pension expense has increased by 11 per cent (for a contributory plan) due to the decrease in the discount rates despite the good returns (relative to the discount rate).
About Morneau Shepell
Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell - Pension/Retirement