Draft Regulations

On April 30, 2012, the Ontario government finally released the first round of regulations to implement the amendments to the Ontario Pension Benefits Act (the PBA) in Bill 236 and Bill 120.

The regulations which are in draft form, and are subject to consultation, address the following issues:

  • Enable proclamation of the retired member provisions to the PBA;
  • Implement immediate vesting for plan members and increase the threshold for small pension payout;
  • Further clarify the surplus payment rules;
  • Reflect changes to the Income Tax Act relating to Individual Pension Plans;
  • Clarify the interest provisions; and
  • Include additional housekeeping and consequential amendments.

The government also announced its intention to implement immediate vesting effective July 1, 2012.

We will discuss the amendments in detail at out Client Seminar on May 16, 2012.

Comments can be provided to the government on the draft regulations until June 1, 2012.

Consultation on Grow-In

In addition, the government released a discussion paper entitled Grow-in Benefits and Related Amendments and associated regulations in draft form.

The discussion paper describes the amendments which are said to come into effect July 1, 2012 and which will require pension plans to provide grow-in benefits for members whose age and service total at least 55 and whose employment is ended by their employer irrespective of whether there is a plan wind-up.

The discussion paper also describes a new section 74.1 which allows employers and members of jointly sponsored and multi-employer pension plans to opt out of providing grow-in benefits for their plan members. We will be discussing this election and the proposed regulations at our Client Seminar.

In addition, the discussion paper notes that the amendments to section 74 of the PBA once proclaimed will extend grow-in benefits to any eligible member whose plan is fully wound up or whose employment is terminated by an employer other than as 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 circumstances as may be prescribed".

The discussion paper suggests that the regulations will prescribe that grow-in will also be required where an employer has given notice of termination of employment and the employee decides to end their employment within 60 days before the date of termination. In this context, it is said that the member should not lose their entitlement to grow-in benefits by leaving a job shortly before termination to pursue other employment.

In the context of plan wind-up or partial plan wind-ups, employees who terminated their employment after the announcement of the wind-up or partial wind-up were typically required to receive grow-in benefits. However, as a closure or wind-up is no longer necessary to trigger grow-in benefits, the new provisions state that in any context where there is significant working notice, if the member leaves within 60 days of the date when their employment would otherwise end, that grow-in will apply. Employers will want to consider whether this is problematic and whether they wish to make submissions on this issue.

There are also included in the discussion paper the specific exclusions from the requirement to provide grow-in:

  • where a member is an employee who is hired on the basis that the employment would end on a definite term or contract or on completion of a specific task;
  • for construction employees as defined in the Employment Standards Act; and
  • for employees who are on temporary lay-off as defined in subsection 56(2) of the Employment Standards Act.

The discussion paper will likely hear submissions of other proposed exclusions such as certain transfers to a related employer. Employers again will want to consider other potential exclusions which should be suggested to the government.

Finally, the discussion paper also flags that the PBA will allow the Superintendent to order a wind-up where all or substantially all of the members cease to be employed by an employer. It also notes that for greater certainty, the Superintendent will be allowed to order a wind-up where there are only inactive members. It is interesting to note that the recently released revised version of the B.C. Pension Benefits Standards Act allows the Superintendent the right to continue a plan even where there are no active members. Accordingly, both jurisdictions seem to indicate that it is a matter of discretion as to whether such a plan will be continued. This again is open to consultation in Ontario and the question is whether employers want to provide comments on this issue now or will instead make submissions to the Superintendent where they end up in circumstances with an inactive plan.

Comments on the discussion paper and draft regulations are due by June 1, 2012.

Consultation on JSPP

On April 25, 2012, the Ontario government announced that it was beginning its consultations on a new legislative framework for jointly sponsored public-sector pension plans as announced in the 2012 Budget.

Filing Extension

On April 27, 2012, the Ontario government released a summary of the Proposed Amendment to Regulation 909 under the PBA Filing Extension for Certain Pension Plans in the Public Sector and Broader Public Sector.

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.