As of July 1, more amendments to the Pension Benefits Standards Act, 1985 contained in Bill C-9 will come into force. These will apply to all federally regulated pension plans.
Sonia Mak, partner with Borden Ladner Gervais LLP in the pensions and benefits group, reminds plan administers that they must be ready to comply with the new immediate vesting and 50% rule.
The statutory maximum vesting period of two years of continuous membership is removed. A pension plan must provide for immediate vesting, for both pre-reform and post-reform benefits. The pre-reform vesting rules are also removed.
Members who has been in the plan for a continuous period of at least two years are not permitted to withdraw any part of his/her contributions to the plan in respect of plan membership on and after Oct.1, 1967 (except additional voluntary contributions) if the member is or would be entitled to a deferred benefit.
Fifty percent rule
Under the current federal pension legislation, the rule that member contributions must not constitute more than 50% of the member’s pension benefit applies to only member contributions made after Dec. 31, 1986, although a plan can extend the application to contributions made on or before that date.
This rule will apply to all member contributions, whether they are made before or after Dec. 31, 1986, come July 1.