New amendments to the Ontario Pension Benefits Act, which are expected to come into effect on July 1, 2012, will require pension plans to provide grow-in benefits for members whose age plus service total at least 55 and whose employment is ended by their employer, subject to certain specified exceptions. The new amendments allow multi-employer pension plans (MEPPs) and jointly sponsored pension plans (JSPPs) to opt out of providing grow-in benefits to their members. If a decision is made to opt out of providing grow-in benefits, existing MEPPs and JSPPs may want to do so by July 1, 2012 to prevent the application of the grow-in benefits provisions in any interim period.
Opting Out Process
Draft Regulations set out the details of the opting out process and propose that existing MEPPs and JSPPs will have until July 1, 2013 to make a one-time election to opt out of the grow-in benefit provisions. Importantly, the draft regulations state that the effective date of the election cannot be earlier than the date on which the election is filed with the Superintendent.
The Financial Services Commission of Ontario (FSCO) has indicated that MEPPs and JSPPs which intend to opt out of the grow-in provisions from the expected date of inception, i.e., July 1, 2012, may file notice of their elections with the Superintendent before July 1, 2012, i.e. now. The effective date of the elections cannot, however, be earlier than the date the new section permitting the opt out comes into force (expected to be July 1, 2012).
FSCO has also announced that MEPPs and JSPPs that are registered in other jurisdictions and have Ontario members may elect to opt out of providing grow-in benefits to their Ontario members. Specified requirements will need to be met for such elections to be valid.
Prompt Action for MEPPs and JSPPs
If a MEPP or JSPP decides to opt out of the grow-in benefits provisions, it will be important for it to file a notice of election promptly, because the growin provisions are expected to come into effect on July 1, 2012 and the draft regulations propose that the effective date of the election cannot be earlier than the date on which the election is filed with the Superintendent. Any delay in filing after the date of inception of the grow-in benefits could result in the application of the grow-in benefits provisions. For instance, filing a notice of election on August 1, 2012 would have the effect of having the grow-in benefits provisions apply from July 1, 2012, to July 31, 2012.