Minimum Standards

• Author: Ari Kaplan/Mitch Frazer
• Pages: 200-310

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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 their working life. Min-

imum standards arise under the Pension Benef‌its Act1(t he PBA) and its

regulations, as expanded upon in regulatory policies and informed by

other relevant legislation2 and the common law. These standards are

f‌irst and foremost employee protections and they can aect an employ-

er’s and employees’ freedom to contractually design t he provi sions that

form the content of a pension plan.

A. MEMBERSHIP

1) Introduction

The pension standards di scussed in this chapter are st atutory rights that

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

be said that in the c ase of pension plans, membership has its right s, not

privileges. The legal nature of being a plan “member” and the benef‌its

and obligations that f‌low therefrom, are well articulated as follows:

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

2 Pension standa rds are also aected by t he Income Tax Act, RSC 1985, c 1 (5th

Supp), as amended [ITA]. The rules under the ITA are not minimum sta ndards

per se, but rather, ta x standards: see Chapter 3, S ection D(2).

Minimum Standards201

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 pri ncipally on that “bundle of rights,” derived

from the PBA and other legal in struments that are conferred on employ-

ees 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

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

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

(Alta CA), leave to appeal to SCC ref used (1992), 92 DLR (4th) vi [Cicconi].

4 PBA, s 10(1)2.

5 See federal (PBSA, ss 14(1) & (2), and 15(4)); Alber ta (AEPPA, s 29(2)); British

Columbia (BCPBSA, s 29(2)); Quebec (QSPPA, s 34); and Saskatchew an (SPBA,

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

502 (March 2012) which provides th at mandatory membership m ay be a condi-

tion for membership set out i n the plan text.

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

PENSION LAW202

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 their 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 ad ministrator to

comply” with its membership disclosure obligations.10

Where an eligible employee is not advised of their right to join the

pension plan, one possible remedy, depending on the circumsta nces, is

for the administrator to be requ ired 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

o from employment, and contributions have not been made to the plan

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

employee may terminate membership without terminating employment,

if the plan terms permit.13

8Hu man Rights Code, RSO 1990, c H.19, s 25(1) [OHRC]. Section 5 of the OHRC

provides th at every person has a rig ht to equal treatment wit h respect to employ-

ment without dis crimination becau se of race, ancestry, place of origi n, colour,

ethnic orig in, citizenship, creed, s ex, sexual orientat ion, gender identity, gender

expression , age, record of oences, marital st atus, same-sex part nership status,

family status, or disability.

9 PBA, ss 25(1) & (2). See als o federal (PBSA, s 28(1)(a)); Alberta (AEPPA, s 37(1));

British Columbi a (BCPBSA, s 37(1)); Manitoba (MPBA, s 29); New Brunswick

(NBPBA, s 23); Newfoundland an d Labrador (NLPBA, ss 25(1) and (3)); Nova

Scotia (NSPBA, s 38); Quebec (QSPPA, s 111); Saskatchewan (SPBA, s 13(1)(a)).

10PBA, s 25(3).

11Amalgamated Transit Union, Loca l 1182 (Re), [2003] NBL EBD No 39; Amalgam-

ated Transit Union, Local 1290 v New Brun swick (Superintendent of Pension s),

[2004] NBLEBD No 2; and Re Trustees of the St Bonifa ce Hospital/Union’s Jointly

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

16 September 1997, written decision 8 De cember 1997).

12Ontario (PBA, s 3 8); Nova Scoti a (NSPBA, s 54(1)). In federal (PBSA, s 2(2)), this

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

13 QSPPA, s 36(1).