Minimum Standards

• Author: Ari N. Kaplan
• Profession: Partner, Koskie Minsky LLP. Faculty of Law, University of Western Ontario
• Pages: 209-315

209

CHAP TER 5

MINIMUM STANDARDS

This chapter descr ibes 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 sta ndard s arise under the Pension Benef‌i ts Act1(t he PBA)

and the Income Tax Act2 (th e ITA) and their respective regulations, as

expanded upon in regulatory policies and informed by other relevant

legislation and the common law. These standard s are f‌i rst and foremost

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

freedom to contractually de sign the provisions that form the content of

a pension plan.

A. MEMBERSHIP

1) Introduction

The pension standards d iscussed in this ch apter are statutory rights that

arise as a re sult of an employee’s membership in a pension plan. It might

be said that in the case of pension plans, membership ha s its r ights, not

privileges. The legal nature of bei ng a plan “member” and the benef‌i ts

and obligations that f‌l ow therefrom, are well articulated as follows:

1 R.S.O. 1990, c. P.8.

2 R.S.C. 1985, c. 1 (5th Supp.), as amended.

PENSION LAW210

A pension plan i s not an association like a club, or a un ion. The word

“member” does not fai rly describ e the relationship. It is e ssentia lly

a contractual and com mercial relation ship. … The worker need not

have any voice in man agement of the plan, or select ion of its man-

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

“membership” in other context s. The plan could be, as suc h plans

often are, a private busi ness venture. “Member ship” is simply the

word chos en to descr ibe the worker ’s bundle of rig hts, derive d either

by agreement or by tru st law or by statute, against the managers.3

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

rived from the PBA and other legal instrument s, 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 m ake membership

voluntar y or mand atory.5 In Manitoba, where an employee falls into

the class of employees for which a pension plan was established, mem-

bership is mandatory.6 Where participation in a pension plan is a com-

pulsory term of employment, some jurisdictions provide for statutory

exemptions where the employee objects to membership on religious

grounds.7

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

denied or made conditional becaus e a term or condition of employment

3Cicconi v. Alberta (Superinten dent of Pensions) (1991), 86 D.L.R. (4th) 469 at 478

(Alta. C.A.), leave to appeal t o S.C.C. refused (1992), 92 D.L.R. (4th) vi. [Cicco ni].

4PBA, s. 10(1)2.

5 See Albert a (AEPPA, s. 29(5)), federal (PBSA, ss . 14(1) & (2), and 15(4)), Briti sh

Columbia (BCPBSA, s. 25(6)), Quebec (QSPPA, s. 34), and Saskatchewan (SPBA,

s. 24(2)). In Ontar io, the PBA is silent on this poi nt, but see FSCO Policy M100-

500 (May 1990) which provides t hat mandatory membersh ip may be a condi-

tion for membership s et out in the plan text.

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

two years of employ ment, and for part-time employees, a fter having earned 2 5

percent of the YM PE for two consecutive calenda r years.

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

has addition al exemptions for employees who are ful l-time students (MPBA, s.

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

commencement date of t he plan (MPBA, ss. 21(20)(c) & (d)).

Minimum Sta ndards 211

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

ence, or exclusion on a prohibited ground of discrimi nation.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 descr iption 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 give the plan

administ rator all “information necessary to en able the administrator to

comply” with its membership dis closure 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 admi nistrator to be required to ad mit the employee

retroactively.11

c) Voluntary termination of membership

Ordinari ly, membership in a pension plan terminates when employ-

ment t erminates . Some jur isdict ions per mit an emp loyee to vol untari ly

terminate membership in a pla n 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, R.S.O. 1990, c. H.19, s. 25(1). Section 5 of the Code provides

that every p erson has a right to equa l treatment with resp ect to employment

without disc rimination becau se of race, ancestry, place of orig in, colour, ethnic

origin, cit izenship, creed, sex, s exual orientation, age, r ecord of offences, mari-

tal statu s, same-sex partnersh ip status, family stat us, or disability.

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

15(1)(a)), British Columbia (BCPBSA, s. 10(1)), Manitoba (MPBA, s. 29), New

Brunsw ick (NBPBA, s. 23), Newfoundland a nd Labrador (NLPBA, ss. 25(1) and

(3)), Nova Scotia (NSPBA , s. 31), Quebec (QSPPA, s. 111), Saskatchewan (SPBA, s.

13(1)(a)).

10 PB A, s. 25(3).

11 R e Amalgamated Transit Union, Local 1182 and Superintend ent of Pensions and

City of Saint John and City of Saint John Pensio n Board, [2003] N.B.L .E.B.D. No.

39 (N.B.L.R.B.); Amalgamat ed Transit Union, L ocal 1290 v. New Br unswick (Super-

intendent of Pen sions), [2004] N.B.L.E.B.D. No. 2 (N.B.L.R .B.); and Re Trustees

of the St. Boniface Hospital /Union’s Jointly Truste ed Pension Plan (Decision of the

Pension Commis sion of Manitoba dated 16 September 1997, written de cision 8

December 1997).

12 Ontario (PBA, s. 38), Nova Scotia (NSPBA, s. 44(1)). In federal (PBSA, s. 2(2)),

this is li mited to certain circ umstances where the plan i s a MEPP.