Minimum Standards

AuthorAri Kaplan, Mitch Frazer
This chapter describe s the principal mini mum pension standards th at
aim to ensure that an employee who participates in a pension plan
will have a pension avai lable 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 (th e ITA) and their respect ive regulations, as
expanded upon in regulator y 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 desig n the provisions that form the content
of a pension plan.
1) Introduction
The pension standards di scussed in thi s chapter are statutory rights
that arise a s 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
Minimum Standards 195
the benef‌its and obligations that f‌low therefrom, are well articulated as
A pension plan is not an a ssociation like a club, or a union. The word
“member” does not fairly de scribe the relat ionship. It is essential ly a
contractual and com mercial relationship . . . . The worker need not
have any voice in management of t he plan, or selection of its man-
agers, or any of the attribute s commonly associated w ith the word
membership in other contex ts. The plan could be, as such plans often
are, a private busine ss venture. “Membership” is simply t he word
chosen to descr ibe the worker’s bundle of rights, derive d either by
agreement or by tru st law or by statute, against t he 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 clas s
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 prov ide 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 (BCPBS A, s 25(6)); Quebec (QS PPA, 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 (MPB A, 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)).
It will be a breach of the Human Rights Code where employ ment 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 t he right to
receive from the plan administrator a description of the provisions that
apply to the employee and an explanation of his or her right s 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 admin istrator to be required to admit the employee
c) Voluntar y termination of membership
Ordinari ly, 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 m ade 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 (A EPPA , 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 (QS PPA, s 111); Saskatchewan (SPBA, s 13(1)(a)).
10 PBA, s 25(3).
11 Re 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-
sio ns), [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).
12 Ontario (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.

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