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Ontario Allowing Defined Benefit Pension Sponsors to Defer Contributions For 6 Months

Companies pay into pension plans so employees can have an income in retirement.

In the 1990s the government allowed GM & Stelco to stop contributing to their pension plans because they were “too big to fail”.

You know how that worked out.

Ontario is again allowing companies to defer payments into pensions. Starting earlier this month on October 1, 2020, employers are now allowed up to six months of monthly contributions that are due between October 1, 2020 and March 31, 2021.

No need to panic. Companies will have to make up those deferred payments (with interest).

It’s just that right now, companies are grappling with weak cash flow due to the coronavirus. This is to help companies with that issue.

Pensions are regularly audited by the government. A pension must remain fully funded or they are obliged to top up the pension.

It’s like your household budget. Let’s say you quit your job. You still need to eat but you can suspend making contributions to your RRSP.

Same thing.

 

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