This Bill sets the stage for many changes on the horizon coming out of the 2008 Report of Ontario Expert Commission on Pensions Most changes are to be proclaimed at a date or dates to be named in the future, expected to be starting July 1, 2012. The major changes in this first step are as follows:
- Partial Plan Wind-ups are to be eliminated from the proclamation date, however, in their place, immediate vesting will be required and the normal grow-in provisions that applied upon partial or full wind-up will now apply for every employee who is terminated involuntarily, other than for cause. What this will mean is any employees being terminated involuntarily whose age plus employment service totals 55 or more points at termination date will be eligible to grow into any early retiremnt provisions within the Pension Plan. This will greatly increase the payout on some plans for eligible employees.
- Similar to Manitoba’s recent change, Ontario will increase the small pension cash out rule such that if a member’s pension is less than 4% of the Yearly CPP Earnings, or $157 p.m. of pension in 2010, or if the commuted (present) value of the pension is less than 20% of the Yearly CPP Earnings, or $9,440 lump sum in 2010, the benefit is not considered locked-in and is therefore payable in cash. Previously this rule was only in respect of pensions less than 2% of the Yearly CPP Earnings.
- The Bill includes various measures designed to facilitate the establishment of Pension Advisory Committees (PACs). These PACs would allow active and retired members to monitor the plan on an advisory basis. If member groups notify the Plan Sponsor of their intention to establish a PAC, the Plan Sponsor must distribute notices to all active and retired members and provide other assistance as will be prescribed in the future. This could have far reaching effects on how plans are administered in the future.
- There are numerous administrative changes proposed as well including the issue of information statements each year to former members with vested benefits and retired members and requiring notice of all plan amendments be given to all plan members, including vested deferred and retired members, before application for registration of the amendment.