More amendments to the Pension Benefits Standards Act, 1985 (PBSA) contained in Bill C-9 will come into force. These amendments apply to federally-regulated pension plans.
More amendments to the federal pension legislation will come into force on July 1, 2011. These amendments include provisions that:
- provide for immediate vesting, and
- extend the 50% rule to pre-1987 member contributions.
IMMEDIATE VESTING
The statutory maximum vesting period of 2 years of continuous membership is removed. A pension plan must provide for immediate vesting, for both pre-reform and post-reform benefits. The pre-reform vesting rules are also removed.
In addition, a member who has been a member for a continuous period of at least 2 years is not permitted to withdraw any part of his/her contributions to the plan in respect of plan membership on and after October 1, 1967 (except additional voluntary contributions) if the member is or would be entitled to a deferred benefit.
FIFTY PERCENT (50%) RULE
Under the current federal pension legislation, the rule that member contributions of a member must not constitute more than 50% of the member's pension benefit applies to only member contributions made after December 31, 1986 although a plan can extend the application to contributions made on or before that date. When the change comes into force, this rule applies to all member contributions, whether they are made before or after December 31, 1986.
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