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Pensions & Benefits Law A Discussion of Canadian and U.S./Cross-Border Pension & Benefit Legal Issues

Immediate Vesting is Coming in Ontario – Plan Ahead

Posted in Canada Pensions & Benefits Law, Legislation & Regulations, Pension Reform, Plan Administration

As we mentioned in an earlier blog post, Bill 236, the Pension Benefits Amendment Act, 2010, received Royal Assent on May 18, 2010.

While not yet in force, sections 23 and 24 of the Bill provide for immediate vesting of pension benefits, as compared to the current 2-year vesting period for post-reform benefits (post-1986 service), and “45 and 10” vesting for pre-reform benefits (pre-1987 service). With immediate vesting, all plan members will be entitled to a deferred pension upon termination of their plan membership.

Plan sponsors should begin considering now how to react to this change.

Most sponsors will have to amend their pension plans and administration systems to reflect immediate vesting for all pension plan members.

In certain circumstances, however, where the sponsor’s pension plan does not currently contain a waiting period for new employees to become eligible for pension plan membership, the sponsor may wish to avoid having new employees become immediately eligible for a deferred pension. It can do this by amending its plan to institute a waiting period for pension plan eligibility for all new hires. Bill 236 has not changed the eligibility provisions found in section 31 of the Pension Benefits Act, which continue to permit sponsors to require a waiting period of up to 24 months for full-time and part-time employees, before they become eligible to join the pension plan. 

  • Mark

    When will section 23 & 24 come into effect? Also, would that mean that those who are currently not vested be subject to the immediate vesting provisions of the Act?

  • Douglas Rienzo

    It is not known when sections 23 and 24 will come into effect. According to the Bill, they come into effect on proclamation. Once in effect, they apply to all members of the pension plan whose employment terminates after that date.