Retirement Services - Ontario Pension Legislation
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Pension Benefits Act
Original: January 1, 1965
Reform: January 1, 1987
Year last amended: 1999
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Index
Benefit Splitting
Cash Availability at Termination of Employment
Definition of Spouse
Early Retirement
Eligibility
Employee Excess Contributions
Flexible Pension Plan
Indexing of Pensions
Integration with Governmental Plans
Minimum Employer Contribution – 50 % Rule
Minimum Interest Rate on Employee Contributions
Normal Retirement
Options Available on Pre-Retirement Death
Portability at Termination of Employment for a Member to a Deferred Annuity
Post-Retirement Death Benefits
Postponed Retirement
Pre-Retirement Death Benefits
Sex Discrimination
Vesting and Locking-In
Vesting at Normal Retirement Date
Disclaimer
Benefit Splitting
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Benefits may be split between spouses or same-sex partners in accordance with a court order or with an agreement on assignment of pension benefit entitlement.
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Benefits splitting may take place only on the member's normal retirement date or on the date when pension benefits start being paid, whichever comes first.
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Cash Availability at Termination of Employment
Plan may provide for refund of:
- 25% of commuted value of deferred pension (pre-1987 benefits); and
- Commuted value of pension if total annual pension is less than 2% of YMPE.
Locked-in funds in prescribed retirement savings plans may be commuted in cases of financial hardship and shortened life expectancy. The latter situation is recognized under pension plans as well.
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Definition of Spouse
On the date of the member’s retirement or on the day of the member’s death, if earlier.
The person who is married to the member and who is living with him; or
if the person is not married to the member and has been living in a conjugal relationship with the member, either continuously for a period of not less than 3 years or, in a relationship of some permanence, if they are the natural or adoptive parents of a child.
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Early Retirement
Within 10 years of normal retirement date.
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Eligibility
Full-time employees: 2 years of continuous service.
Part-time employees: 2 years of continuous service and annual earnings of at least 35% of YMPE, or 700 hours worked, in each of 2 consecutive calendar years immediately preceding membership.
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Employee Excess Contributions
Reimbursed.
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Flexible Pension Plan
No requirement.
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Indexing of Pensions
(Defined Benefit Plans)
Indexing rules have not been established by the provincial government to date.
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Integration with Governmental Plans
(Defined Benefit Plans)
Reduction on account of the OAS: pro-rata formula required (35 years) for years of service before 1987. Prohibited for years of service after 1986.
Reduction on account of the CPP/QPP: pro-rata formula required (35 years).
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Minimum Employer Contribution-50% Rule
(Defined Benefit Plans)
At least 50% of commuted value of pension benefits accrued from January 1, 1987.
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Minimum Interest Rate on Employee Contributions
Defined Contribution Plan: fund rate of return based on market value of investments.
Defined Benefit Plan: fund rate of return or the average yield on personal 5-year term deposits when chartered banks over a recent period not exceeding 12 months.
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Normal Retirement
No later than 1 year following 65th birthday.
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Options available on Pre-Retirement Death
Spouse: cash, RRP, RRSP, RRIF, Annuity (post 1986 benefits only).*
Dependent child/grandchild: cash, fixed term annuity to age 18.
Other beneficiary: cash.
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Portability at Termination of Employment for a Member Entitled to a Deferred Annuity
More than 10 years before normal retirement date.
Options:
- Transfer to: another pension plan, a LIRA, a LIF, an LRIF (if member has reached early retirement age, or earlier if the plan so provides).
- Purchase of a life annuity contract.
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Post-Retirement Death Benefits
Joint pension continues at 60% after death of either spouse or same-sex partner. Possibility to waive joint pension by spouse or same-sex partner and member within 12 months of pension commencement.
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Postponed Retirement
(At the latest December 31 of the year in which the member reaches 69)
Membership may continue except if the member is receiving a pension.
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Pre-Retirement Death Benefits
Pre-1987 benefits: no requirement.
Post-1996 benefits: if surviving spouse or same-sex partner, 100% of commuted value of vested benefits (not locked-in). Pre-retirement death benefits may be waived by spouse or same-sex partner. If no surviving spouse or same-sex partner or if the member and his/her spouse/partner are living separate and apart, commuted value of vested benefits to the designated beneficiary, or failing that, to the estate (not locked-in).
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Sex Discrimination
Sex discrimination required - annuity rate based on sex
Sex discrimination prohibited - unisex annuity rate
Sex discrimination allowed - annuity rate based on sex or unisex annuity rate
Before 1987: sex discrimination allowed.
After 1986: sex discrimination prohibited.
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Vesting and Locking-In
(Excluding voluntary contributions and optional ancillary contributions)
Benefits accrued from 1965 to 1986: age 45 plus 10 years of continuous service or plan membership.
Post-1986 benefits: 2 years of plan membership.
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Vesting at Normal Retirement Date
The information contained in this summary applies only to single employer Registered Pension Plans (RPPs). In addition, this information states the minimum rules provided under the pension legislation that governs RPPs. However, it does not state the maximum rules under the Income Tax Act (Canada) and its Regulations that also apply to RPPs.
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Disclaimer
The legislation and the regulations of this jurisdiction prevails over this summary. While every effort has been made to ensure the accuracy of the information, no warranty is expressed or implied as to the accuracy, adequacy or completeness of the information, and the CUMIS Life Insurance Company is not responsible for any errors, omissions, or from the results from the use of such information.
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