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Ontario government releases 2018 Economic Outlook and Fiscal Review

An in-depth look at these and other subjects are covered in the current issue of the Morneau Shepell News & Views

TORONTO, Dec. 19, 2018 /CNW/ - Morneau Shepell released the December 2018 issue of its monthly newsletter, News & Views, in which the Company looked at a number of topics including: the slowed pace of observed increases in life expectancy for Old Age Security beneficiaries, a new guideline issued by the Financial Services Commission of Ontario on administrative monetary penalties, the Quebec government's intent to abolish all existing "orphan clauses" in pension and benefit plans, the Canadian Association of Pension Supervisory Authorities' revised electronic communications guideline for pension plans, the 2018 Ontario Economic Outlook and Fiscal Review and the federal government's consultation paper on enhancing retirement security in Canada.

  • Pace of observed increases in life expectancy slows for old age security beneficiaries – The chief actuary at the Office of the Superintendent of Financial Institutions released the latest mortality experience factsheet for old age security (OAS) recipients in Canada on September 20, 2018, showing that the pace of observed increases in life expectancy for OAS beneficiaries has slowed over the past 15 years. The article reviews the potential impact of the slowdown on employer-sponsored pension plans, as well as Canadians' retirement planning needs, and the possible impact if longevity begins to accelerate again. 
  • Financial Services Commission of Ontario issues guideline on administrative monetary penalties – The Financial Services Commission of Ontario (FSCO) issued a guideline on November 13, 2018 that summarizes legislative provisions for administrative monetary penalties (AMPs) under the Pension Benefits Act. The guideline outlines the process for imposing AMPs, how a person subject to a proposed AMP may dispute it and how AMPs are to be paid. AMPs expand the enforcement options and tools available to FSCO to regulate registered pension plans in Ontario.
  • New Quebec government proposes to eliminate "orphan clauses" – The Quebec Minister of Labour, Employment and Social Solidarity stated that the new Quebec government intends to force the elimination of all existing "orphan clauses" (differences in treatment with respect to eligibility for pension plans or other employee benefits based solely on the date of hire) between current and new employees. The proposal could have a significant impact on employers with provincially regulated employees in Quebec who have closed their defined benefit pension plans or any other benefit program to new employees. 
  • Electronic communications guideline for pension plans issued – On November 1, 2018, the Canadian Association of Pension Supervisory Authorities (CAPSA) requested public comment on Guideline No. 2Electronic Communications in the Pension Industry, a newly revised draft replacing the 2002 version. The guideline aims to provide a set of principle-based industry standards and best practices for pension plan administrators to adopt as part of their electronic communications framework, in conjunction with legislative requirements. 
  • Ontario government releases economic outlook and Bill 57 – On November 15, 2018, the new Ontario government released the 2018 Ontario Economic Outlook and Fiscal Review, as well as Bill 57, the Restoring Trust, Transparency and Accountability Act, 2018, outlining a number of items related to pension and benefit plans. The government announced it will follow through with plans to permit defined contribution pension plans to pay variable benefits directly to retirees, provide discharges for purchases of buy-out annuities in respect of surviving spouses in receipt of a pension, commit to spending $1.9 billion over 10 years on mental health and addictions services and require persons under the age of 25 to receive drug reimbursement from their private drug plans rather than OHIP+.
  • Consultation paper released on enhancing retirement security in Canada – The federal government released a consultation paper on November 22, 2018, inviting public comment on proposed approaches for enhancing security in the retirement income system. The paper proposes varied options relating to federal pension legislation, corporate governance and bankruptcy and insolvency law.
  • Tracking the funded status of pension plans as at November 30, 2018 Morneau Shepell shared the changes in the financial position of a typical defined benefit plan with an average duration since December 31, 2017. The graph in the newsletter shows the impact of three typical portfolios on plan assets and the effect of interest rate changes on solvency liabilities of medium duration.
  • Impact on pension expense under international accounting as at November 30, 2018 Morneau Shepell showed the expense impact for a typical pension plan that starts the year at an arbitrary value of 100 (expense index). Since the beginning of the year, the pension expense has decreased by nine per cent (for a contributory plan) due to an increase in discount rates despite the low returns on assets (relative to the discount rate).

About Morneau Shepell
Morneau Shepell is the only human resources consulting and technology company that takes an integrated approach to employee well-being, health, benefits and retirement needs. The Company is the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. LifeWorks by Morneau Shepell is a total well-being solution that combines employee assistance, wellness, recognition and incentive programs. As a leader in strategic HR consulting and innovative pension design, the Company also helps clients solve complex workforce problems and provides integrated productivity, health and retirement solutions. Established in 1966, Morneau Shepell serves approximately 24,000 clients, ranging from small businesses to some of the largest corporations and associations. With more than 4,500 employees in offices worldwide, Morneau Shepell provides services to organizations around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.

SOURCE Morneau Shepell Inc.

For further information: Catherine Snider, Kaiser Lachance Communications, 647.725.2520 ext. 212, catherine.snider@kaiserlachance.com