Shoring up Ontario's pension system with pledges of temporary relief and stronger oversight is too tempered a response to a report that calls for sweeping reforms amid concerns over shortfalls for retiring workers, critics say.
The province said it would take "immediate action'' to protect the viability of the system by increasing the capacity of its regulator to oversee pension plans.
It would also consider temporary relief to help plans "manage solvency funding'' in the face of investments underperforming amid "market uncertainty.'' The moves came on the heels of a report that recommends creating a new commission to regulate pensions and expanding the Canada Pension Plan, or creating a similar plan provincially to control costs and broaden coverage.
In his report, Harry Arthurs, former president of York University in Toronto, said Ontario's current pension procedures are too slow and cumbersome for people who must switch pension plans or those left with none at all.
He also recommended the government require pension funds to have assets equal to 105 per cent of their liabilities before they can stop putting funds into the plan.
While his report was completed before the financial turmoil of recent months, Arthurs said his findings were relevant because they address pension plans, which have a longer shelf life than any one dip in the economy.
"By better designing the system I think we can move ahead,'' Arthurs said.
"People may not like the metaphor, but thinking about the design of the levee system in New Orleans came to the top of the agenda.'' New Democrat Leader Howard Hampton said the latest measures by Dalton McGuinty's Liberal government do little to address the issues raised in the report.
"It won't do anything to address the shortfall that a number of pension funds are facing,'' Hampton said.
"What it might do is it might help some companies who are in trouble right now, it might give them more time, but it won't do anything for pensioners.'' Finance Minister Dwight Duncan also expressed concern that Ontario could be on the hook for pensions if struggling automaker General Motors files for bankruptcy. GM pays into the province's Pension Benefits Guarantee Fund, which could be drained if GM fails.
Opposition Leader Bob Runciman said increasing oversight by giving more power to the regulators was a wise move, "to ensure those funds are properly managed at a time of extreme volatility.'' Still, Runciman said GM's fate was a more "pressing concern.'' "The General Motors pension deficit ... could be anywhere from $4.5 and $6.5 billion,'' he said.
"If General Motors Canada were to go bankrupt, the taxpayers in this province would be on the hook.'' Deputy Premier George Smitherman declined to speculate on how much of a hit taxpayers could face if the province is forced to top up GM, saying that for now, those questions are "hypothetical.'' "The efforts that we're involved in are to do with due diligence, about what array of assistance might be appropriate and helpful in the very challenging circumstance that automotive manufacturers are facing,'' Smitherman said.
"Our efforts are focused on the automotive industry continuing to be a very, very important presence in the Ontario economy going forward.'' Federal Industry Minister Tony Clement and Michael Bryant, Ontario's economic development minister, were in Washington last week in an attempt to find out what a hotly debated bailout for U.S. automakers could mean for Canadian jobs.
To Hampton, however, the pension troubles at GM simply signal the start of the province's pension woes.
"There are other pension plans that are in trouble now as well,'' Hampton said.
"Some are in trouble because of the downturn in manufacturing ... some are in trouble because of the most recent problems in the stock market. This has been known for about five years.'' There are more than 7,500 pension plans registered in Ontario with about two million members.
The government said it will seek feedback until Feb. 27 and will then look at introducing legislation to deal with the report's recommendations.
