Canada: Pension Law Changes and Your Ontario Registered Pension Plan

Last Updated: June 14 2010
Article by Jana Steele

There has been a flurry of activity in the pension regulatory world over the past several months. This article will set out some of the changes that you should be aware of and potential future changes to watch for.

Ontario changes

There are changes to Ontario law that will likely require plan amendments to be made. The new Ontario legislation has recently been partially passed into law, but there are several sections of the legislation that are not yet in force. In addition, there will be regulations filed at some point to provide more detailed rules and provide further clarification. Following is a brief discussion of some of the more noteworthy changes under the new legislation.

Immediate vesting

Vesting is an important pension standard—once a member is vested in his or her benefits under a pension plan, the member's benefit cannot be taken away upon the termination of employment of the member.

The new laws will require immediate vesting for plan members, whereas the prior rules required vesting within 24 months of plan membership. Accordingly, if your plan has a vesting period, amendments will be required to comply with the new rules.

Grow in benefits and partial wind ups

Under the current rules, where there is a wind up of a registered pension plan that provides certain enhanced early retirement provisions, members terminated as a result of the full or partial wind up are allowed to "grow in" to these benefits provided they meet the eligibility requirements (age plus years of service total 55 or more).

Under the new rules, effective July 1, 2012, any terminated member (unless terminated for cause) who meets the 55 points eligibility requirement will be entitled to grow in to these enhanced early retirement benefits. Multi-employer pension plans and jointly sponsored pension plans will be able to elect to be exempt from the grow in provisions.

The new rules also provide that partial wind ups will be eliminated at a date to be proclaimed in force.

Small benefits

Where a pension to be paid out to a member is sufficiently small, the rules allow the administrator to pay the benefit as a lump sum payment instead of as a pension. The new rules will increase the permissible threshold amount for such lump sum payments. Where your plan text refers specifically to the small benefit amount, plan changes would be required to increase the amount to the new permissible threshold.

Phased retirement

The tax rules were recently changed to allow defined benefit pension plans to provide for phased retirement. Phased retirement essentially permits plan members to commence to receive a pension under a plan while still continuing to accrue benefits under the plan.

Once proclaimed in force, Ontario law will permit plans registered in the province to include phased retirement provisions. Plans are not required to include phased retirement; however, under the new rules they may include this benefit.

Plan amendments

The new rules include changes to the way in which plan amendments may be affected. Under the current rules, pension plan administrators are not required to provide advance notice of plan amendments, unless the amendments are adverse in nature. Under the new rules, once proclaimed, administrators will be required to provide prior notice to members, former members and retired members of all plan amendments (subject to regulations being filed exempting some types of amendments).


The new rules, once proclaimed, will permit a plan administrator to communicate electronically (in compliance with the Electronic Commerce Act, 2000) with plan members, former members, retired members, and other interested persons, as long as the administrator has permission from the person to do so.

Asset transfers, plan mergers and prior sales

The new rules also address asset transfers between plans and plan mergers. The changes, once proclaimed, appear to address certain concerns regarding this complicated area of pension law. Specifically, with respect to asset transfers, the rules provide that if the parties reach an agreement and certain other requirements and prescribed conditions are met, then the regulator shall consent and the asset transfer may proceed. In addition, the new rules will allow a window of time (up to July 1, 2015) in which prior divestments can be addressed.

It should be noted, however, that much of the detail pertaining to these changes is to be provided through regulation.

Surplus sharing agreements on wind up

Under the new laws, an employer and members and former members and others entitled under a pension plan can enter into an agreement with respect to payment of surplus on the wind up of the plan under which a portion of the surplus may be paid to the employer, without having to establish entitlement based on the historical plan and trust provisions.

Will the recent proposed changes to federal pension regulations affect my Ontario registered plan?

The short answer is no. The proposed changes to the federal pension regulations will apply to federally registered pension plans.

There are changes to the federal investment rules proposed. Although the federal investment rules apply to Ontario registered pension plans, the proposed changes would not apply in Ontario unless Ontario laws were also changed. In the recent Ontario Budget, the government indicated that once the federal investment rules were amended, Ontario would examine their appropriateness to Ontario-registered plans.

The proposed changes to the federal rules would not eliminate the controversial 30% rule, which restricts a pension plan from investing the plan monies in the securities of a corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation. In the Ontario budget, the government made specific reference to the 30% rule in the context of its commitment to examine the new federal investment rules once they are implemented.

Other considerations

Ontario is not the only province moving forward with pension law changes. To the extent that your plan contains members in other provinces, it is important for you to monitor changes in the law in such other provinces and ensure that your plan continues to provide the minimum standards in the other provinces to residents of such provinces.

This article highlights certain key changes that may impact your Ontario-registered pension plan. The Ontario government is also expected to release further proposed legislative changes that will affect Ontario registered pension plans. It is important for plan administrators to continue to stay apprised of all legislative and regulatory changes that may affect their plans and make plan amendments or changes to administrative practices, as required.

This article originally appeared on

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions