Little guarantee for Ontario pensions

Pension fund unable to cope with bankruptcies
By Shannon Klie
|Canadian HR Reporter|Last Updated: 05/04/2009

Ontario is the only Canadian jurisdiction with a pension benefit guarantee fund but decades of improper funding, combined with the stock market meltdown and impending failure of corporate titans GM, Chrysler and Nortel Networks, mean the fund won’t be able to cover all employees with at-risk pensions, warned Premier Dalton McGuinty.

Established in 1980, Ontario’s pension benefit guarantee fund (PBGF) covers single-employer, defined benefit (DB) pension plans registered in the province that have paid into the fund — with more than one million beneficiaries as of 2007.

Eligible plan sponsors pay into the fund annually based on the number of members and the plan’s unfunded liability status, with sponsors with higher unfunded liabilities (and greater risk of failure) paying a greater percentage.