Ontario’s four government-run energy-sector pension plans with a combined C$15.8 billion (US$14.5 billion) in assets are unstable and don’t have strategies to handle future deficits if they underperform actuarial assumptions, said an Ontario Finance Ministry report.
None of the four defined benefit plans — C$10.3 billion Ontario Power Generation Inc., Toronto; C$5 billion Hydro One Inc., Toronto; C$300 million Independent Electricity System Operator, Toronto; and the C$200 million Electrical Safety Authority, Mississauga, Ontario — “are currently stable,” according to the report on the ministry’s website.
“Nor do (the funds) have the ability or flexibility to handle any adversity as the parties do not share risks and the benefits are fully guaranteed regardless of the investment performance of plans,” said the report, written by Jim Leech, special adviser to the ministry and former president and CEO of the C$140.8 billion Ontario Teachers’ Pension Plan, Toronto.
The report suggested that the four plans move toward a target of 50% employer/50% employee contributions within five years, and a 9% to 12% limit on contributions from both the companies and the employees. In 2012, the four plans took in a combined C$585 million in contributions, of which about C$105 million came from employees, the report said.
Mr. Leech’s report also suggested that the pension plans move from their current single-employer format to a jointly sponsored pension plan to improve governance and receive additional benefits that come from pooled asset management.
The full report can be found on the government’s website.