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.