Commission on the Reform of Ontario's Public Services

Chapter 19: Liability Management
To increase the probability of securing the 2017–18 target, risks and liabilities should be
identified as early as possible in the planning process. Ministries must be vigilant in
anticipating what could go wrong with all projects. Strategies will need to be developed to
identify and reduce specific risks to the fiscal plan, such as federal government action and
pension liabilities. The following section identifies liability risks that require the province to
develop management plans for moving forward. This is intended to be an illustrative list of
risks that should be currently known and subject to mitigation strategies. There are, no doubt,
many more current risks, and more will undoubtedly surface as we move through the
projection period. As such, the liability management strategy must be very fluid.
Upcoming Liability Risks
Pension Benefits Guarantee Fund
Ontario’s Pension Benefits Guarantee Fund (PBGF) was created in 1980 and was intended
to assist pensioners and plan members when occupational pension plans are wound up with
insufficient funds to cover promised benefits, and the employer is unable to make the required
payments. The PBGF is administered by the Superintendent of Financial Services and
generally covers single-employer defined benefit pension plans in the private and broader
public sectors. Ontario is the only jurisdiction in Canada to provide such coverage.
In 2009, the government retained an independent actuarial firm to conduct the first actuarial
study of the PBGF, including revenues and claims, to inform the development of long-term
policy. The study, released in 2010, concluded that the PBGF was not sustainable in its
current form and noted that overall assessments would have to increase by as much as
1,000 per cent if coverage were increased to $2,500 a month as had been previously
recommended by the Arthurs <strong>Commission</strong>. 1
On several occasions over the last 30 years, there has not been enough cash in the Fund
to cover large anticipated PBGF claims. In those instances, several loans were made from
the Consolidated Revenue Fund to cover claims. The only loan amount still outstanding is
$242 million of a $330 million loan made in 2004 to cover a significant claim. In 2010, the
government made a $500 million grant to the PBGF to initiate the PBGF reform process and
stabilize the Fund in the near term. In May 2011, $384 million was paid out of the Fund in
partial settlement of another significant claim.
1 This estimate did not take into account the $500 million grant made in 2010.
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