Commission on the Reform of Ontario's Public Services

Ontario is the only sub-national jurisdiction in the world with a pension benefits guarantee
fund. With fewer than 1,600 covered plans, and PBGF exposure concentrated in certain
industries, risk is not spread according to insurance principles. To fully insulate the PBGF from
catastrophic claims and update coverage levels, significantly higher assessments and larger
reserves would be required.
Recommendation 19-3: We recommend that the province either terminate the Pension
Benefits Guarantee Fund or explore the possibility of transferring it to a private insurer.
The Fund is no longer sustainable in its current form as it presents a large fiscal risk for
the province in the event of another economic downturn.
Liability from Pension Funds in the Broader Public Sector
Introduction
Ontario Public Service (OPS) and broader public-sector (BPS) pension plans include some
of the largest plans in the country — both in terms of the value of assets and number of
members. The province provides funding to these plans through both direct and
indirect mechanisms.
The topic of pensions is multi-faceted and technical, with varying governance structures and
risk-sharing arrangements, as well as distinct funding and accounting considerations. Many
aspects of the plans could be reviewed. Yet the <strong>Commission</strong>’s mandate suggests our focus
be on the fiscal dimensions and hence our approach has been rather narrow. We examine the
public cost of the plans, the risks they represent to the Province’s fiscal plan and strategies to
manage these risks.
Given the government’s significant exposure to liabilities associated with some of these plans,
we believe that steps should be taken to improve transparency and strategic planning with
respect to pension expense in an effort to better manage this risk.
Recommendation 19-4: The Ontario government should conduct and publish its own liability
management assessment of the public-sector pension plans and develop plans to contain any
fiscal risks identified.
Description of BPS Pension Plans
There are currently five plans consolidated in the province’s financial statements: Public
Service Pension Plan (PSPP); OPSEU Pension Plan (OPSEUPP); Ontario Teachers’ Pension
Plan (TPP); Healthcare of Ontario Pension Plan (HOOPP); and Colleges of Applied Arts and
Technology (CAAT) Pension Plan.
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