Ontario’s pension funding reform: Will it impact investment?

…Pension funds will need to undertake a stress test to calculate how much would be available in the plan immediately to meet all future obligations. Plans that are capitalized above the 85 percent threshold would get immediate relief from payments when the legislation takes effect, which is expected during 2018. Struggling plans that are financed below 85 percent would only need to pay up to the new benchmark, making it easier and faster for them to pass the solvency test. According to human resources consulting and technology company Morneau Shepell, the proposal will mark a shift “away from volatile solvency funding and towards more stable, long term going-concern funding,” which, it says, will “result in lower and more predictable contributions for most but not all plans.”

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