Flexibility Improved for Pension Plan Administrators

ENVIRONMENT AND LABOUR--Flexibility Improved for Pension Plan Administrators

The government introduced a bill today, Oct. 7, that would remove the requirement for pension plan administrators to provide unreduced early retirement benefits to members not eligible for those benefits, on full or partial wind-up of a pension plan.

The proposed amendment to the Pension Benefits Act would not affect an employee's pension plan after age 65, and would only apply under very specific and unique circumstances.

"The change will reduce the contributions required to provide for the liabilities associated with this early benefit, which is sometimes known as a grow-in," said Kerry Morash, Minister responsible for Pension Regulations. "This change is very reasonable, considering this grow-in is an extra, top-up benefit that, in fact, has the potential to affect very few people."

The amendment would remove a benefit that would apply if all the following circumstances occurred:

• The employee is in a defined benefit plan;
• The plan already allows for a subsidized early retirement benefit;
• All or part of the business is closing down;
• The employee has, at that point, years of service and age adding up to 55.