We apologize for the technical difficulties in our previous correspondence.

One of the results of pension reform in Ontario in 1988 was the introduction of "grow- in" rights. Grow-in rights allow Ontario members with defined benefits affected by a partial or full wind up of their pension plan to "grow in" to ancillary benefits such as enhanced early retirement benefits provided under their plan, if their age and service equals at least 55 points.

One of the most significant changes brought about by Ontario's Bill 236 is that, effective July 1, 2012, grow-in rights will apply to all terminations by employers, unless the employee was terminated for "wilful misconduct". Special rules will permit multi-employer plans and jointly sponsored plans to elect to be excluded from this rule.

This expansion of grow-in will have an impact on pension costs. Employers are used to taking into account the cost of providing grow-in benefits in the context of partial or full wind-ups. In the future, the cost of grow-in benefits will be a factor in all individual and group terminations where a plan has enhanced early retirement benefits.

In addition to the pension implications, this raises employment law questions that employers need to consider immediately. For example, can employees who are terminated prior to July 1, 2012 take the position that they are entitled to grow- in benefits based on common law or statutory notice periods? What behaviour constitutes "wilful misconduct" so as to disentitle an employee to these benefits? Can plans be amended to remove these costly benefits, and what happens if an employee objects to the amendment?

Please plan on participating in our Webinar on June 17, 2010, 12:00-1:00 EST for a more in-depth discussion of the pension and employment implications of this and other changes made by Bill 236. An invitation will follow.