Summary of Pension Legislation in Ontario - January 2006
Eligibility
Full-time employees: 2 years of continuous service
Part-time employees: 2 years of continuous service and annual
earnings of at least 35% pf YMPE, or 700 hours worked, in each of 2
consecutive calendar years immediately preceding membership.
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
Vesting at normal retirement date
Entitlement to a pension vests at normal retirement date
only if minimum vesting and locking-in requirements are met.
Minimum employer contribution - 50% rule
(Defined Benefit Plans)
At least 50% of commuted value of pension benefits accrued
from January 1, 2007
Employee excess contributions
Reimbursed
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 with chartered banks over a recent
period not exceeding 12 months.
Cash availability at termination of employment
Plan may provide for refund of:
a) 25% of commuted value of deferred pension (pre-1987 benefits);
and
b) commuted value of pension if total annual pension is less than 2%
of YMPE.
Plan may provide for the unlocking of pension funds in cases of
disability likely to shorten considerably life expectancy (i.e. two
years or less). Spousal consent required, where applicable.
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 and LRIF
(if member has reached early retirement age, or earlier if the plan
so provides). Purchase of a deferred life annuity contact.
Normal retirement
No later than 1 year following 65th birthday.
Early retirement
Within 10 years of normal retirement date.
Postponed retirement (at the latest December 31st of the year in which the member reaches age 69)
Membership may continue except if the member is receiving a pension.
Pre-retirement death benefit
Pre-1987 benefits: No Requirement
Post-1986 benefits:
If surviving spouse, 100% of commuted value of vested benefits (not
locked-in). Pre-retirement death benefits may be waived by spouse.
If non surviving spouse or if the member and his/her spouse are
living separate and apart, commuted value of vested benefits to the
designated beneficiary, or failing that, to the estate (not
locked-in).
Options available on pre-retirement death
Spouse/common law partner: Cash, RPP, RRSP, RRIF, Annuity*
Dependent child/grandchild: Cash, Fixed term annuity to age 18
Other beneficiary: Cash
- Post-86 benefits only
Post-retirement death benefits
Joint pension continues at 60% after death of spouse. Possibility to waive joint pension by spouse and member within 12 months of
pension commencement.
Integration with government 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).
Indexing of pensions (Defined Benefit Plans)
To be prescribed
Sex discrimination
Years of service before 1987:
Discrimination allowed - annuity rate based on sex or unisex
annuity rate
Years of service after 1986:
Discrimination prohibited - unisex annuity rate
Beneficiary splitting (breakdown of marriage or of conjugal relationship)
- Benefits may be split equally between spouses in accordance with a court order or with an agreement on assignment of pension benefit entitlement.
- Benefit 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.
Definition of "spouse"
The person who:
a) is married to the member; or
b) the person not married to the member and who is living
with the member together in a conjugal relationship continuously for a period of
not less than three years, or who is in a relationship of some permanence if the
person and the member are the natural or adoptive parents of a child, both as
defined in the Family Law Act.
Flexible Pension Plan
No requirement.
Summary of Main Administrative Requirements
Employee contributions Remit no later than:
30 days following month of deduction.
Employer contributions Remit no later than:
Defined contribution Plan: 30 days after the month for
which the contributions are payable.
Defined Benefit Plan:
- Current Service: 30 days after the end of the month for which the contributions are payable.
- Special Payments: Remittances must be in equal monthly installments.
Annual information return (AIR) combined with Canada Revenue Agency?
Yes:
For Defined Benefit Plans, a Pension Benefit Guarantee Fund
assessment certificate must also be filed with the AIR.
AIR Filing delay from plan fiscal year-end
Defined Contribution Plan: 6 months
Defined Benefit Plan: 9 months
Certified/audited financial statement required?
Certified financial statement accepted if less than
$3,000,000 in assets; otherwise, must be audited.
Financial statement required to be filed?
Yes, 6 months from plan fiscal year-end.
Filing fee per member ($)
6.15 for active members
4.25 for former members and other plan beneficiaries
Minimum filing fee ($)
250
Maximum filing fee ($)
75,000
Preparation of a Statement of investment Policy and Goals/Procedures (SIP&G/P)
Required
SIP&G/P filing required with pension authorities?
Not required. However an Investment Information Summary
must be filed by Defined Benefit Plans within 6 months of plan fiscal year-end.
SIP&G/P filing delay from plan start date/SIP&G/P revision
60/60 days with advisory committee and plan's actuary.
Actuarial valuation and cost certificate minimum frequency
for Defined Benefit Plans
Every 3 years. Except designated pension plans - annually
if solvency ratio is <.80 or if solvency liabilities exceed solvency assets by
more than $5M and solvency ratio is <.90. Actuarial Information Summary must be
filed with actuarial valuation.
Cost certificate minimum frequency for Defined Contribution Plans
Summary/Revised Summary of Contributions (From 7) must be
given to pension fund trustee(s) within:
-
90 days after the date the plan is established;
-
60 days after the beginning of subsequent plan years; and
-
60 days after a change in Summary of Contributions.
Filing delay from triennial review date
9 months
Plan amendment filing delay after amendment is made
60 days
Delay to Provide Statement of Options to Plan Member
Within 30 days following termination of employment, or where the notice of termination is not provided to the administrator prior to termination, within 30 days following the receipt of such notice
Delay for member to make election known to the administrator
Within 60 days following termination of employment
Delay to make the transfer
Within 60 days following the receipt of all documents
required by the administrator to comply with the direction
Note: The above apply to pension plans registered in Ontario. Please contact us if you require information on another Jurisdiction.
Additional Sources of Information
Financial Services Commission of Ontario (FSCO)
Canada Revenue Agency (CRA) - Registered Plans
Office of the Superintendent of Financial Institutions (OSFI) - Pension Section