The Act removes MPPs from the standalone MPP pension plan and makes members of the Legislative Assembly participants in Ontario’s Public Service Pension Plan (PSPP). It authorizes the Lieutenant Governor in Council to create an MPP supplemental pension plan with initial terms set out in statute and preserves special vesting rules for members of the 44th Parliament.
The measure also repeals the statutory cap on MPP salaries that referenced 2009 levels, creates a specific pay adjustment for the Government House Leader, and permits the government by order to provide allowances for individuals who are not eligible to participate in the PSPP or an MPP supplemental plan. The Act establishes how registered plan account balances transfer or convert when membership in the old MPP plan ends and charges employer obligations to the Consolidated Revenue Fund, creating direct fiscal and administrative implications for the Assembly and the PSPP administrator.
At a Glance
What It Does
The Act enrols MPPs in the province’s Public Service Pension Plan, authorizes a separate MPP supplemental pension plan established by order, and sets statutory initial terms for that supplemental plan. It repeals the MPP salary cap tied to 2009 and adds a Government House Leader pay adjustment.
Who It Affects
Members of the Legislative Assembly (current and future), former MPPs with balances in the old MPP plan, the Public Service Pension Plan administrator, the Board of Internal Economy, and the provincial treasury (Consolidated Revenue Fund).
Why It Matters
This restructures how elected officials’ pensions are governed and paid, shifting liabilities into an existing public-sector plan while retaining a vehicle for MPP-specific top-up benefits; it also creates new administrative transition tasks and explicit rules about who pays and who controls changes to benefits.
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What This Bill Actually Does
The Act dismantles the standalone MPP pension arrangement and integrates membership into the Public Service Pension Plan (PSPP). For pension purposes the Assembly becomes the employer, service as an MPP is defined consistently with existing salary and service rules, and members of the Assembly who meet statutory conditions participate in the PSPP just like other public servants.
For the 44th Parliament only, the Act sets vesting rules that allow certain service to vest on dissolution or death even where pension benefits would otherwise be constrained by general pension law.
Recognizing that the PSPP may not fully replicate historical MPP benefits, the statute gives the Lieutenant Governor in Council the power to establish an MPP supplemental pension plan by order. The law prescribes that the initial design of that supplemental plan must be substantially similar to the terms in Schedule 1, which include a benefit accrual formula, eligibility age, reductions for early or late retirement, inflation adjustments, and a cap on years of service used for accrual.
After the supplemental plan is created, the Board of Internal Economy must consent to any order that would change member benefits or contribution rates, except where changes are required by federal tax law or other legal obligations.The Act spells out transition mechanics for individuals who cease to be members of the old plan: members may use their registered plan account balance to purchase an annuity, transfer to a locked-in vehicle or another registered pension plan (with administrator agreement), or transfer to the Public Service Pension Fund to purchase credit for prior Assembly service. If no choice is made, the default is to purchase a pension in the old plan.
The Speaker must provide each affected individual a statement of their registered plan account balance and options by February 1, 2026. Employer obligations under the PSPP, any applicable supplemental plans, and allowances ordered under the Act are charged to and payable from the Consolidated Revenue Fund.The Act also addresses compensation rules outside the pension context: it repeals the statutory salary limit tied to 2009 and adds a specific 19.2 per cent designation for the Government House Leader.
Finally, the Lieutenant Governor in Council’s orders establishing or administering supplemental plans and allowances are generally exempt from the standard regulatory process under the Legislation Act, 2006, and amounts paid as allowances under those orders are explicitly not treated as salary for the Legislative Assembly Act or for public sector salary disclosure rules.
The Five Things You Need to Know
The initial MPP supplemental pension plan in Schedule 1 uses a 3% accrual rate applied to the highest consecutive 36-month average salary, capped at 35 years of service.
Members of the 44th Parliament vest supplemental benefits on dissolution or death only if they have at least six years’ service as an MPP.
The supplemental plan does not require member contributions — the statute states members are not required to contribute.
Any post-establishment change to benefits or member contribution rates in an MPP supplemental plan can be made only with the consent of the Board of Internal Economy, except where changes are mandated by the Income Tax Act or other law.
The Speaker must send each individual a statement of their registered plan account balance and options on or before February 1, 2026, and certain statutory deadlines for transfer or pension choices are modified by regulation.
Section-by-Section Breakdown
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Repeal of salary cap and Government House Leader adjustment
The Act repeals subsection 61(1.2), which previously limited MPP salaries to the level in effect on March 26, 2009. It also amends subsection 62(1) to add a specific 19.2 per cent designation for the Government House Leader. Practically, this removes an old statutory salary freeze and inserts an explicit pay coefficient for a senior legislative role; both changes affect payroll calculations under the Legislative Assembly Act and could alter comparative salary reporting.
Termination of membership in the old MPP plan and scope clarifications
The Act declares that every member of the existing MPP plan ceases to be a member and repeals the prior provisions that governed that plan. It also clarifies applicability of the Act to certain officers (Information and Privacy Commissioner and Ombudsman) for most provisions, and excludes Part XI and Schedule 1 from some earlier definitions. Those edits are the legal housekeeping needed to remove the old plan and prepare the membership transition into the PSPP and any new supplemental arrangements.
Integration into the Public Service Pension Plan and supplemental plan framework
Part XI defines key terms and makes members of the Assembly participants in the PSPP. It provides that the Assembly is the employer for pension purposes and ties service and salary calculations to existing legislative definitions. The Lieutenant Governor in Council may establish an MPP supplemental pension plan by order and specify its administrator; initial terms must be substantially similar to Schedule 1. The part also confirms that employer contributions for PSPP and supplemental plans are payable from the Consolidated Revenue Fund, placing the fiscal charge squarely on government finances.
Board of Internal Economy consent required for benefit changes
After an MPP supplemental plan is established, the government cannot alter pension benefits, ancillary benefits or member contribution rates by order unless the Board of Internal Economy consents. The only carve-out is changes required by federal tax law or other mandatory legal obligations. This gives the Assembly’s internal spending body a formal check on executive-ordered pension changes and creates an internal governance hurdle for amendments.
Allowance power for non-eligible members and effect on disclosure
The Lieutenant Governor in Council may order allowances for individuals who are not eligible for the PSPP or an MPP supplemental plan, including former members who served on or after January 1, 2026. The Act explicitly removes such allowances from the definition of salary for the Legislative Assembly Act and for public sector salary disclosure. That keeps allowances off official salary figures and the Sunshine List, which has transparency and fiscal-accountability implications.
Transition options for registered plan account balances
When membership in the old plan ends, individuals may use their registered plan account balance to (1) purchase a pension, (2) transfer to a locked-in retirement account or life income fund, (3) transfer to another registered pension plan with the receiving administrator’s agreement, or (4) transfer to the Public Service Pension Fund to buy credit for prior MPP service. If no choice is made the default is to use the balance to purchase a pension under the old plan. The Speaker must provide a statement of balances and options by February 1, 2026, and the minister may set the applicable deadlines by regulation. These mechanics create choices with tax, actuarial and timing consequences for affected individuals.
Statutory initial terms for the MPP supplemental pension plan
Schedule 1 prescribes the baseline design for the supplemental plan: benefits vest on a six-year-service rule with special rules for the 44th Parliament; eligibility begins at age 55; accrual uses the highest 36-month average salary; the accrual rate is 3% per year up to a 35‑year maximum; reductions apply at age 65 and for early retirement; pensions are indexed to the PSPP; and members are not required to contribute. These are substantive plan features that implement economically meaningful entitlements and specify trade-offs between generosity (3% accrual, no member contributions) and usual pension offsets and reductions.
Timing and retroactive elements
Most of the Act comes into force on January 1, 2026, but the Legislative Assembly Act amendments regarding repeal of the salary cap and the Government House Leader adjustment are deemed to have come into force on February 27, 2025. That staggered commencement creates immediate payroll and disclosure implications for fiscal years overlapping those dates and accelerates the administrative timeline for transition statements and actions.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Members of the 44th Parliament who meet the six‑year threshold — they obtain statutory vesting of benefits on dissolution or death that may preserve entitlement otherwise at risk under general pension rules.
- Current and future MPPs who gain access to the Public Service Pension Plan and the statutory supplemental plan design — they receive pension portability into a large public plan plus a top-up framework tailored to MPP service.
- Former MPPs who were ineligible for PSPP coverage — the Lieutenant Governor in Council can order targeted allowances, creating a route to compensate individuals excluded from plan eligibility.
- The Board of Internal Economy — it gains formal oversight authority (consent power) over any subsequent orders that would reduce benefits or raise member contribution rates, increasing its role in pension governance.
- Pension administrators and PSPP members generally — consolidating MPP membership into the PSPP can simplify administration by using existing PSPP systems and may improve plan administration coherence.
Who Bears the Cost
- The Consolidated Revenue Fund/taxpayers — the Act charges employer contributions and allowances to the Consolidated Revenue Fund, increasing direct fiscal exposure for government budgets.
- The Legislative Assembly administration and Speaker’s office — they must produce individualized statements, implement transfers, and coordinate regulation-driven deadlines, creating a short-term administrative burden.
- The PSPP and its sponsor — integrating a distinct membership cohort and a statutorily generous supplemental plan (3% accrual and no member contributions) can change actuarial profiles and long-term funding requirements.
- Opposition parties and internal Assembly finances — pay changes (removal of the 2009 cap and the new Government House Leader percentage) increase wage bill pressures that parties may need to manage within their internal budgeting frameworks.
- Individuals making transfer decisions — members who must choose between annuity purchase, locked-in accounts, transfer to PSPF for credit, or other plans face actuarial, tax and timing costs and potential loss of options if administrator consent is withheld.
Key Issues
The Core Tension
The central dilemma is between honoring and preserving tailored pension entitlements for elected officials (through a legislated supplemental plan and generous initial terms) and safeguarding taxpayer-financial sustainability and transparent governance: the law locks in benefit generosity and routes costs to the Consolidated Revenue Fund while delegating substantive implementation by order, reducing regulatory oversight and raising long-term funding and accountability trade-offs.
The statute relocates MPP pension membership into the PSPP and sets a legislated supplemental top-up framework, but leaves many material implementation questions to orders and regulation. Because the Lieutenant Governor in Council creates supplemental plans and may specify the administrator by order without the standard Part III regulatory process, key design, governance and procurement choices could occur with limited public regulatory scrutiny.
That reduces procedural transparency even as substantive initial terms are pinned in Schedule 1.
The decision to require no member contributions in the supplemental plan and to set a relatively generous 3% accrual rate raises funding and equity questions. Unless offset by contributions or benefit adjustments elsewhere, those provisions shift actuarial cost to the employer (the Consolidated Revenue Fund) and to other PSPP stakeholders who will have to absorb integration effects.
The Board of Internal Economy’s consent requirement gives the Assembly a veto over benefit reductions, but it does not create an independent actuarial review mandate; the interplay between that political control and long-term funding discipline is unresolved.
Transition mechanics are explicit but operationally tricky: individuals must choose among transfers, annuity purchases or buying PSPP service credit, and administrator agreement is required for transfers to other plans. The statutory default to purchase a pension if no choice is made could produce outcomes that some members find suboptimal relative to tax-efficient transfers.
Finally, excluding allowances from salary definitions and public disclosure limits transparency and could complicate public accountability for the fiscal consequences of accommodating ineligible former members.
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