While focusing heavily on social spending, the Ontario Government also set its sights on improving healthcare and continuing pension reform. On April 27th, Ontario Finance Minister, Charles Sousa, tabled the 2017 Ontario Budget. Along with it came a number of implications and considerations for employers.
The Budget places a heavy emphasis on healthcare with increases to hospital funding and special attention to decreasing wait times, home care and better support for seniors. However, the centerpiece is the introduction of OHIP+, a universal drug plan for children and youth age 24 and under to be implemented January 1, 2018. This program with no income testing and full coverage of all drugs on the Ontario Drug Benefit formulary is unlike other drug programs in Canada and will have employers in the province revisiting their current health benefit plans.
Retirement security of Ontarians has been a key policy area for this Government in recent years. We are happy to see a confirmation of the Government’s commitment to bring forward in 2017 a revised funding regime for single employer defined benefit pension plans and target benefit MEPPs, including transition provisions in the short-term.
The Budget is also addressing defined contribution (DC) plans which represent a growing share of workplace pension plans. The proposed implementation of a variable benefits option is a welcome development for those DC plan sponsors who want to give their retiring plan members an option to continue using the investment options offered to active members, thereby benefiting from lower fees available in the institutional DC space.
Because many DC record keepers already provide information about expected retirement income on member statements, the proposed enhanced disclosure requirements in the Budget may be a non-event in many situations. Having said that, it will be interesting to see what information has to be disclosed and whether any guidance will be provided on the methodology to be used in the pension projections.
There are upcoming reforms of labour and employment legislation. The Changing Workplaces Review will be completed this spring after which the government will consider its recommendations addressing issues such as the definition of employee.
The budget is a progress report on many pension initiatives, and some initiatives have been added to the agenda.
For more information on the Ontario Budget, how it will impact employers, and strategies to address the changes, contact a Mercer Consultant today.
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