Minimum Standards

• Author: Ari Kaplan, Mitch Frazer
• Pages: 194-303

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CHAPTER 5

MINIMUM STANDARDS

This chapter describes the principal minimum pension standards that

aim to ensure that an employee who participates in a pension plan

will have a pension available at the conclusion of his or her working

life. Minimum standards arise under the Pension Be nef‌its Act1(the PBA)

and the Income Tax Act2 (theITA) and their respective regulations, as

expanded upon in regulatory policies and informed by other relevant

legislation and the common law. These standards a re f‌irst and foremost

employee protections and they can affect an employer’s and employees’

freedom to contractually design the provisions that form the content

of a pension plan.

A. MEMBERSHIP

1) Introduction

The pension standards discussed in this chapter are statutory rights

that arise as a result of an employee’s membership in a pension plan.

It might be said that in the case of pension plans, membership has its

rights, not privileges. The legal nature of being a plan “member” and

1 RSO 1990, c P.8 [PBA].

2 RSC 1985, c 1 (5th Supp), as amended [ITA]. The rules under the ITA a re not

minimum st andards per se, but rather, ta x standards: See Chapt er 3, Section

D(2).

Minimum Standards195

the benef‌its and obligations that f‌low therefrom, are well articulated as

follows:

A pension plan is not an a ssociation like a club, or a union. The word

“member” does not fairly describe the relationship. It is essentially a

contractual and commercial relationship . . . . The worker need not

have any voice in management of the plan, or selection of its man-

agers, or any of the attributes commonly associated with the word

membership in other contex ts. The plan could be, as such plans often

are, a private business venture. “Membership” is simply the word

chosen to describe the worker’s bundle of rights, derived either by

agreement or by trust law or by statute, against the managers.3

The focus of this chapter is principally on that “bundle of rights,” de-

rived from the PBA and other legal instruments that are conferred on

employees who participate as members of a pension plan.

2) Mandatory or Voluntary Membership

a) Term of contract of employment

A pension plan must set out the conditions for membership in the plan.4

In most jurisdictions, a plan sponsor may make membership voluntary

or mandatory.5 In Manitoba, where an employee falls into the class

of employees for which a pension plan was established, membership

is mandatory.6 Where participation in a pension plan is a compulsory

term of employment, some jurisdictions provide for statutory exemp-

tions where the employee objects to membership on religious grounds.7

3 Cicconi v Alberta (Superinte ndent of Pensions) (1991), 86 DLR (4th) 469 at 478 (Alta

CA), leave to appeal to SCC refu sed (1992), 92 DLR (4th) vi [Cicconi].

4 PBA, s 10(1)2.

5 See federal (PBSA, ss 14(1) & (2), and 15(4)); Albe rta (AEPPA, s 29(5)); Brit ish

Columbia (BCPBSA, s 25(6)); Quebec (QSPPA, s 34); and Saskatc hewan (SPBA,

s 24(2)). In Ontario, t he PBA is silent on this point , but see FSCO Policy M100-502

(March 2012) which provides th at mandatory membership m ay be a condition for

membership set out in t he plan text. As of the date of publ ication, new legislation

has been propo sed for Alberta and Briti sh Columbia, but not yet passed.

6 MPBA, ss 21(19)–(19.2). Membership is mandator y for full-time employees after

two years of employ ment, and for part-time employees, af ter having earned 35

percent of the Year’s Ma ximum Pensionable Earni ngs (YMPE) or having worked

at least a speci f‌ied number of hours (which cannot exceed 700) for two conse cu-

tive calenda r years.

7 See federal (PBSA, s s 14(2) and 15(4)); Manitoba (MPBA, s 21(20)(b)). Manitoba

has addition al exemptions for employees who are fu ll-time students (MPBA,

s 21(20)(a)) and certain employees h ired before the later of 1 Januar y 1984 or

the commencement d ate of the plan (MPBA, ss 21(20)(c) & (d)).

PENSION LAW

196

It will be a breach of the Human Rights Code where employment is

denied or made conditional because a ter m or condition of employment

requires enrolment in a pension plan that makes a distinction, prefer-

ence, or exclusion on a prohibited ground of discrimination.8

b) Disclosure and enrolment by plan administrator

An employee eligible or required to join a pension plan has the right to

receive from the plan administrator a description of the provisions that

apply to the employee and an explanation of his or her rights and obli-

gations in respect of the plan.9 An employer is required to g ive the plan

administr ator all “ information necessary to enable the adm inistrator to

comply” with its membership disclosure obligations.10

Where an eligible employee is not advised of his or her right to

join the pension plan, one possible remedy, depending on the circum-

stances, is for the administrator to be required to admit the employee

retroactively.11

c) Voluntary termination of membership

Ordinarily, membership in a pension plan terminates when employ-

ment terminates. Some juri sdictions permit an employee to voluntarily

terminate membership in a plan where the plan is a multi-employer

pension plan (MEPP) or the employee works part-time or has been

laid-off from employment, and contributions have not been made to

the plan on the employee’s behalf for up to twenty-four months.12 In

8 Human Rights Code, RSO 1990, c H.19, s 25(1) [OHRC]. Section 5 of t he OHRC

provides th at every person has a right t o equal treatment wit h respect to

employment wit hout discrimination b ecause of race, ancestr y, place of ori gin,

colour, ethnic origi n, citizenship, creed, se x, sexual orientation, gen der identity,

gender expres sion, age, record of offences, marita l status, same-sex pa rtnership

status, family status, or disability.

9 PBA, ss 25(1) & (2). See als o federal (PBSA, s 28(1)(a)); Alberta (AEPPA, s 15(1)(a));

British Columbi a (BCPBSA, s 10(1)); Manitoba (MPBA, s 29); New Bruns wick

(NBPBA, s 23); Newfoundland and L abrador (NLPBA, ss 25(1) and (3)); Nova

Scotia (NSPBA, s 31); Quebec (QSPPA, s 111); Saskatchewan (SPBA, s 13(1)(a)).

10PBA, s 25(3).

11Re Amalgamated Transit Union, Lo cal 1182 and Super intendent of Pensions a nd

City of Saint John and City of Saint John Pension Bo ard, [2003] NBLE BD No 39;

Amalgamated Transit Union, Local 1290 v New Br unswick (Superintendent of Pen-

sions), [2004] NBLE BD No 2; and Re Tru stees of the St Boniface Hospital/Union’s

Jointly Trusteed Pension Plan (Decis ion of the Pension Commission of Man itoba

dated 16 September 1997, written dec ision 8 December 1997).

12Ontario (PBA, s 3 8); Nova Scoti a (NSPBA, s 44(1)). In federal (PBSA, s 2(2)), thi s

is limited to c ertain circumst ances where the plan is a MEPP.