2.2 Regulation

Pension regulation in Ontario appears much more conservative and “hands-on” than it is in the United States. For example, pension are not allowed to use previous years surpluses to cover newly accrued liabilities. These need to be covered by investment returns and employer contributions occuring in the same year. In Canada, pension benefit increases are only effective after approval by the CRA (Canada’s “IRS”).

In the U.S., pension trustees can increase benefits without getting government approval and utilize surpluses as they see fit. The only constraint on their decisions is their legal obligation to function as fiduciaries of the plan. We do not believe any plan in the U.S. has ever followed such a fiscally conservative program as the one imposed by FSCO on Ontario pensions. It’s possible that pensions in the U.S. would be much better off today if we had done this in the U.S.