There were several notable developments in Canadian pension and benefits law in 2025, many of which will continue to shape plan design, administration and regulatory oversight in 2026 and beyond. Set out below are key 2025 developments, with observations on what they may signal for the year ahead.
Ontario Defined Contribution Pension Plan to Jointly Sponsored Pension Plan Conversions
For some years, the Pension Benefits Act (Ontario) (PBA) has allowed sponsors of single-employer defined benefit (DB) pension plans to convert to a jointly sponsored pension plan (JSPP), including by means of transferring assets to the JSPP. However, until recently, the PBA has not permitted sponsors of defined contribution (DC) plans or combination DB-DC plans to similarly effect asset transfers to a JSPP. Following its 2025 Fall Economic Statement, Ontario passed Bill 68, Plan to Protect Ontario Act (Budget Measures), 2025 (No. 2), which amended the PBA to facilitate such transfers.
When in force, new provisions will enable a single-employer DC plan sponsor to convert to a JSPP through an asset transfer. The provisions will further enable members and others entitled to benefits to elect, on a time-limited basis, to opt out of such transfer in respect of their individual DC accounts, in which case they will receive portability options similar to the rights afforded on termination of plan membership prior to the earliest pension commencement date. Similar provisions will facilitate transfers to a JSPP from the DC component of a combination DB-DC plan (with the DB component treated like a DB-only single employer plan in such circumstances). The amendments will further provide a statutory discharge to the administrator of the DC plan/component once the member’s DC account balance has been transferred in compliance with the PBA. Additional provisions will permit members who cease participation in a DC plan and who subsequently join a JSPP (where their employer has also become a participating employer in the JSPP) to elect to transfer their DC account balances to the JSPP to purchase “past service” (provided that the JSPP has agreed to accept the transfer).
The foregoing amendments are not yet in force, largely pending details in future regulations. When in force, the amendments can be expected to facilitate employers converting their single-employer pension plans to, or otherwise joining, JSPPs and thus will provide more optionality to Ontario employers than previously.
Update on Variable Life Benefits: Quebec and Ontario
In last year’s bulletin, Pensions and Employee Benefits: Trends for 2025, we predicted an increased focus in 2025 on decumulation options under DC plans, including legislative amendments to permit “variable payment life annuities.” Legislative developments or announcements in Quebec and Ontario confirmed our expectations.
Quebec introduced regulatory amendments to support variable payment life pensions (VPLPs). These further supported amendments to the Supplemental Pension Plans Act that were introduced in 2024 by Bill 80. Effective January 1, 2026, these amendments came into force, permitting VPLPs under both DC plans and voluntary retirement savings plans (Quebec’s corollary to pooled registered pension plans). In short, a VPLP is a collective vehicle that supports the decumulation phase of a pension plan or voluntary retirement savings plan member’s life by offering periodic pension income for life. The amount of the payments varies to take into account the return on investments and mortality among the fund’s beneficiaries.
Separately, Ontario’s 2025 Budget confirmed the government’s continued consultation with the pension sector on a new pension option that Ontario calls a “Variable Life Benefit” (VLB). A VLB would be paid from DC plans, pooled registered pension plans and those pension plans that provide for additional voluntary contributions. Like a VPLP, a VLB would give retirees a new alternative by providing a monthly benefit for life. It is expected that Ontario’s eventual VLB rules would be similar in principle to Quebec’s VPLP rules. As other Canadian jurisdictions also adopt similar rules, we will continue to monitor harmonization efforts, which will be of particular concern for sponsors and administrators of multi-jurisdictional DC plans seeking to implement this new decumulation option.
FSRA Supervisory Approach Guidance to Implementation of the Target Benefit MEPP Framework
On August 14, 2025, the Financial Services Regulatory Authority of Ontario (FSRA) invited stakeholders to provide comments on proposed guidance in support of the PBA’s new legislative and regulatory framework for target benefit (TB) multi-employer pension plans (MEPPs), which addressed:
- The process to obtain the FSRA’s consent to convert from a DB MEPP to a TB MEPP (note that the FSRA’s consent is also required if a TB MEPP has its registration transferred from another designated Canadian jurisdiction to Ontario for the first time)
- The FSRA’s assessment of the provision for adverse deviation (PfAD) for TB MEPPs
- Supervisory engagements with TB MEPPs (generally, administrators of DB MEPPs should expect no additional or heightened risk-based regulation solely as a result of a conversion to TB)
Comments were due October 14, 2025, and are summarized on the FSRA’s website. Subsequently, the FSRA issued a Final Guidance on February 2, 2026, with no changes from its August 2025 proposals.
Ontario Case Law: Termination of Group Long-Term Disability Coverage and Benefits at Age 65
University Health Network (Toronto Western Hospital And Toronto General Hospital) v. Ontario Nurses’ Association, a labour arbitration, involved a grievance by the Ontario Nurses’ Association (ONA) that the employer’s long-term disability (LTD) plan, which terminated eligibility for LTD benefits at age 65, contravened the Human Rights Code (Ontario) (Code) and the Canadian Charter of Rights and Freedoms (Charter). The employer relied on combined provisions of the Code and the Employment Standards Act, 2000 (Ontario) (ESA) that together created an exception permitting differential treatment of employees aged 65 and over in the provision of benefits. The ONA, in turn, argued that to the extent that these provisions purported to create an exception, they contravened the Charter’s guarantee of equal protection and benefit of the law without discrimination based on age, and so should be struck down.
The arbitrator found in favour of the employer and determined that, in this case, the combined Code and ESA provisions were reasonable limits on the Charter’s equality rights. In particular, the arbitrator canvassed their historical development in conjunction with Ontario’s elimination of mandatory retirement and found that, in introducing the exception for age-based cutoffs at age 65, the government had a pressing and substantial objective to preserve the viability of benefit plans providing LTD for Ontario employees. It chose the age-65 cutoff for rational reasons as a proxy for many employees’ normal retirement date. The cutoff minimally impaired affected employees’ rights and was proportionate to achieve the Legislature’s objective.
The arbitrator distinguished this case involving LTD benefits from another earlier, well-known Human Rights Tribunal decision rejecting an age 65 cutoff for certain non-LTD health and welfare benefits: Talos v. Grand Erie District School Board. The Ontario arbitrator also reached a different conclusion on age 65 cutoffs for LTD benefits than was reached in 2024’s Okanagan College v. Okanagan College Faculty Association, although the latter decision was decided under British Columbia’s somewhat differently worded human rights legislation.
For further information on this bulletin, please contact any member of our Pension, Benefits & Executive Compensation group.
