Bill 236, the Pension Benefits Amendment Act, 2010, received Royal Assent on May 18, 2010, and is important to all Ontario plan sponsors, according to an Osler, Hoskin & Harcourt LLP blog.
The bill is not yet in force, but of note to plan sponsors are Sections 23 and 24, which provide for immediate vesting of pension benefits, compared with the current two-year vesting period for post-reform benefits and “45 and 10” vesting for pre-reform benefits. Under immediate vesting, all plan members will be entitled to a deferred pension upon termination of their plan membership, writes Douglas Rienzo, a partner with Osler.
He explains that plan sponsors should start thinking now about how to react to this change, as 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,” says Rienzo. “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- and part-time employees, before they become eligible to join the pension plan.
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