The Financial Services Commission of Ontario (FSCO) has
posted information for jointly sponsored
pension plans (JSPPs) and multi-employer pension plans (MEPPs)
which are planning to opt out of the new grow-in benefit regime. Of
particular note, these plans may file notice of their election with
the Superintendent of Financial Services before July 1, 2012,
though the effective date of the election cannot be earlier than
July 1, 2012.
As a result of previous amendments to the Ontario Pension
Benefits Act (the PBA), expected to be effective July 1, 2012,
all defined benefit (DB) plan members who satisfy the "rule of
55" will be entitled to grow-in benefits if their employer
terminates their employment, unless such termination "is a
result of wilful misconduct, disobedience or wilful neglect of duty
by the member that is not trivial and has not been condoned by the
employer," or such other exceptions as prescribed by the
regulations apply. JSPPs and MEPPs can opt out of this expanded
grow-in regime by filing an election with the Superintendent
excluding their members from the operation of s. 74 of the PBA.
Draft amendments to Regulation 909 under the
PBA (the Draft Regulations) specify that current JSPPs and
MEPPs which want to opt out of the grow-in regime must do so by
July 1, 2013, and that JSPPs and MEPPs established after the new
rules come into force may opt out within one year of their
establishment. The Draft Regulations also set out:
information to be included on the election form (e.g., the name
and registration number of the pension plan, the name and contact
information of the administrator and the effective date of the
notice requirements (e.g., for members, employees eligible to
become members, unions and advisory committees).
JSPPs and MEPPs may also subsequently rescind an election to opt
out. The way the Draft Regulations are currently worded, there can
be no subsequent opt out once such rescission has occurred.
In its recent announcement, FSCO provides further details on the
information that they want to see included in an election. In
particular, in the case of a JSPP, the election must include a
confirmation that the decision to opt out of the grow-in benefits
regime was made by the employers and the members
(or their representatives) of the JSPP, and the election must be
signed by an individual authorized to sign the election on behalf
of the employers and the members. An election from a MEPP must
include a similar confirmation from the plan administrator.
As I noted above, MEPPs and JSPPs can file these election forms
now (with an effective date of July 1, 2012).
Should the Draft Regulations not come into force on July 1, 2012 or
if the Draft Regulations are changed so as to not permit
elections to be filed prior to July 1, 2012, however, these
previously filed elections will be invalid.
FSCO's announcement also notes that JSPPs and MEPPs
which are registered in other jurisdictions but have Ontario
members may also elect to opt out of providing grow-in benefits to
their Ontario members.
Douglas Rienzo practises exclusively in the
area of pensions and employee benefits, with a particular focus on
pension surplus issues and family law issues related to
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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