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This insurance regime stands in contrast to the lack of safeguards in Canada, including both the absence of public insurance in most provinces and the troubling financial inadequacy of Ontario's PBGF, which is circumscribed by legislation to comparatively slight revenue-raising powers.
(116) Specifically, the study's authors, Norma Nielson and David Chan, found that plans eligible for PBGF coverage exhibited a lower degree of plan funding than did the other Canadian plans in the sample.
First, in response to Nielson and Chan's conclusion that the PBGF has led to increased underfunding in Ontario, I would argue, without denying the validity of their data, that the correlation between the PBGF and lower plan funding does not necessarily mean that the PBGF causes plans to have lower levels of funding.
Even in Ontario, and for all its other deficiencies, the PBGF addresses the danger of pushing sponsors into bankruptcy by imposing a ceiling on annual contributions.
FSCO data shows that 98% of all plans pay annual PBGF premiums lower than $100,000 per year; that no plans are affected by the normal premium cap of $4 million; and that only two plans are affected by the special contribution cap of $5 million imposed by the 1992 "too big to fail" regulation.
Were each province to institute its own public guarantee fund like the PBGF, it is possible that caps, eligibility and excluded types of plan would vary across the country.
(161) Given Nielson and Chan's study showing that Ontario plans covered by the PBGF are more underfunded than comparable Canadian plans, some provincial governments could even argue that a national insurer would constitute a veiled attempt to transfer funds from healthy Maritime, Quebec or Western plans to Ontario.
Note that the PBGC guarantees shortfalls in multi-employer plans while the PBGF does not.
Nielson herself indicates that the one per cent of plans in Ontario with the highest dollar value difference between their PBGF liabilities and assets is dominated by the steel and auto industries.
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