This Alert is relevant to you if you maintain a pension plan
for employees located in Ontario.
In the recent Ontario budget, the Ontario government made the
The government intends to proclaim the following legislative
provisions into force, effective July 1, 2012:
elimination of partial plan wind-ups;
immediate vesting of pension benefits;
extension of grow-in benefits to all eligible employees whose
employment is terminated by the employer on or after July 1, 2012,
other than for cause; and
the ability of multi-employer pension plans and
jointly-sponsored pension plans to elect not to provide grow-in
Draft regulations on various pension reform legislative changes
introduced in 2010 will be posted for public comment this spring
and later in the year. For example, the draft regulations
clarify pension surplus rules;
specify the rights and responsibilities of retired members;
strengthen funding rules for defined benefit pension plans
(including eligibility conditions for contribution holidays and
accelerated funding of benefit improvements).
The 2009 solvency relief regulations will be extended.
The legislative provisions to be proclaimed into force will have
significant impact on the design and administration of your pension
Although it is not time yet to prepare the actual plan
amendments, it is desirable to commence reviewing the plan
documents and the administration of your pension plans to consider
the required actions to ensure their continued legal compliance
and, more generally, the effect of these legislative provisions on
the overall operation of your business.
Here are some of the key considerations you may want to take
What is the effect of immediate vesting on the cost of
maintaining your pension plan? Is it desirable or appropriate to
extend or impose an eligibility requirement to mitigate the
increased cost? What are the human resources and employment law
How do these changes affect the cost and process of involuntary
termination of employment? How can the effect be appropriately
Does the extension of grow-in benefits apply to your pension
plan? Grow-in benefits are only relevant to pension plans that
provide defined benefit pension benefits.
Does the extension of grow-in benefits affect employees to whom
notices of termination are given prior to July 1, 2012 but which
expire on or after that date? Does it make any difference if an
employee is given payment in lieu of notice? What if the minimum
notice period under employment standards legislation has expired
but not the common law notice period?
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