Commission on the Reform of Ontario's Public Services

Chapter 19: Liability Management
The PSPP is solely sponsored by the province, and the remaining four plans are Jointly
Sponsored Pension Plans (JSPPs). In the case of solely sponsored plans, the employer is
wholly responsible for funding any shortfall. In contrast, JSPPs require that both employer
sponsors and employees share responsibility for making up any shortfall by negotiating some
combination of contribution increases and prospective benefit reductions. These obligations
are set out in the Pension Benefits Act, its Regulations and individual plan documents.
TABLE 19.1 Public-Sector Pension Plans Reflected in the Province’s Financial Statements
Pension Plan Assets
($ Billions)
Active
Members
Contribution Rates (%)
Employees Employers
Retirement
Factors*
PSPP 17.4 41,000 9.5 9.5 Factor 90 or
Age 60 + 20 Years
OPSEUPP 13.3 47,000 10.0 10.0 Factor 90 or
Age 60 + 20 Years
TPP 107.5 175,000 12.0 12.0 Factor 85 or
35 Years
HOOPP 35.7 170,000 9.2 10.67 Age 60 or
Age 55 + 30 Years
CAAT 5.5 19,000 12.9 12.9 Factor 85 or
Age 60 + 20 Years
Notes: Teachers’ Pension Plan contribution rate is scheduled to increase from 12.0 per cent in 2011 to 13.1 per cent over three years, with full implementation
in 2014. The CAAT contribution rate is scheduled to increase to 13.7 per cent by 2014. “Years” indicates Years of Service. Public safety workers (e.g., fire,
police, paramedics) have a normal retirement age of 60 and can generally retire earlier.
Ultimate Question
One of the biggest questions from a liability management perspective is who is ultimately
responsible should a plan or plans get into serious financial difficulty. The answer is different
for different types of pension plans. Most of the major public-sector plans are jointly
sponsored, which means employer sponsors and members share this responsibility.
The government, and hence the taxpayer, bears significant risk as joint sponsor of the TPP
and the OPSEUPP, and sole sponsor of the PSPP. This is a serious potential liability. For the
other major public-sector plans, HOOPP and CAAT, employers share legal liability for funding
shortfalls with members.
Because of the significance of this risk, it is critical to ensure greater public clarity and address
fiscal and liability issues associated with these plans.
Recommendation 19-5: Clarify who bears the ultimate financial responsibility for funding
deficits of the public-sector pension plans as the <strong>Commission</strong> encountered considerable
confusion on this issue.
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