1. What is a pension plan wind up? Why does a wind up happen?
The purpose of a pension plan wind up (sometimes referred to as a termination) is to determine and settle all member entitlements in accordance with the pension plan documents and the applicable legislation and regulations.
A pension plan may be wound up if:
2. How long does a wind up of a pension plan take?
Due to legislative requirements, the wind up of a pension plan and the distribution of pension benefits to pension plan members can be a lengthy process.
In our capacity as the Administrator, we will correspond with you from time to time and provide you with updates of the wind up process.
3. I’ve heard that my plan does not have enough assets to cover benefits promised to members (i.e., it has a deficit). How does this happen?
There are several reasons why a defined benefit pension plan may have a deficit:
Federal and provincial pension legislation allows for benefit improvements and plan losses to be funded over a certain number of years. If a wind up occurs before the benefits are fully funded, the plan will have a deficit.
4. I am currently receiving a monthly pension. Will my payments stop? Will my pension amount change?
Monthly pension payments will continue to be paid to all eligible retirees during the wind up process.
One of the first responsibilities in our administration will be the preparation of a preliminary actuarial valuation of the pension plan. Based on the information that we are able to obtain, we will estimate the extent to which the assets of the pension fund are sufficient to pay all of the promised benefits.
In the event that the assets are not sufficient to pay the promised benefits, we will be required to take steps to protect the pension fund and the benefits of all members. In this case the retirees’ monthly pension may be reduced. We will notify retirees in writing, in advance of any change in the amount of monthly pension that they were receiving.
5. When I retired, I elected a Joint & Survivor pension benefit. What impact will the wind up of the pension plan have on the survivor benefit payable on my death?
A Joint & Survivor pension benefit provides a monthly pension payment over the course of both the member’s and spouse’s lives. When the retiree dies, the spouse (if living), continues to receive a pension benefit for the remainder of his or her lifetime. This continued pension benefit is typically less than the amount paid while the retiree was alive.
The wind up will not affect the form of pension a retiree elected when he or she retired. A member who elected a Joint & Survivor form of pension upon retirement will continue to have this form of pension. However, depending on the funded level of the pension plan, the amount of pension benefit payable may be reduced because of the wind up.
6. As a retiree, will I be allowed to transfer my entitlement out of the pension plan as a lump sum on the completion of the wind up?
Retirees in the pension plan who are currently receiving a monthly pension benefit and those who elect to commence a monthly pension during the wind up are not permitted to convert their pension entitlement into a lump-sum payment.
In the final stages of our wind up administration, we will purchase annuities from one or more Canadian life insurance companies for pensioners and members who choose the pension option, in accordance with the provisions of the pension plan documents and the applicable legislation and regulations.
7. What is an annuity?
An annuity is a contract purchased from an insurance company. Under the contract, the insurance company provides the annuitant(s) (the retiree and his or her spouse or beneficiary, if applicable) with a series of regular, monthly pension payments.
8. I am not currently collecting a monthly pension but I am eligible to retire. Can I start collecting a monthly pension during the wind up?
Any member who was not employed in Quebec, who is eligible to retire from the pension plan and wishes to commence their pension can request a retirement quote. We will be able to provide the retirement quote after:
Note: If you elect to start receiving a monthly pension you will not be offered the option to transfer your lump-sum entitlement upon approval of the Wind Up Report. Instead, once the wind up process is completed, we will purchase an annuity for you from a Canadian life insurance company.
9. I am not collecting a monthly pension. When will I be allowed to transfer my entitlement out of the pension plan? Will I continue to receive interest on my lump sum until it is paid?
Members who wish to transfer their entitlement out of the pension plan will only be offered the option to do so once the Wind Up Report has been approved.
Upon approval of the Wind Up Report, members not collecting a monthly pension will be provided with option forms that detail their entitlement from the pension plan and their settlement options.
In most situations, the transfer value will be locked-in according to the applicable pension legislation and regulations. Legislation provides that a locked-in benefit may not be taken as a cash refund, but must be used to provide you with a monthly retirement income.
10. What is the Pension Benefits Guarantee Fund (“PBGF”) and what benefits does it cover?
The PBGF is an insurance-type compensation plan that provides limited protection for pension benefits of pension plan members and pensioners who were employed in Ontario in most underfunded single-employer, defined benefit registered pension plans.
The PBGF does not cover the following benefits:
The PBGF rules are complex but, in general:
| Age + Service | % of Eligible Benefits Guaranteed (to a maximum of $1,000 per month) |
| 50 | 20% |
| 51 | 28% |
| 52 | 36% |
| 53 | 44% |
| 54 | 52% |
| 55 | 60% |
| 56 | 68% |
| 57 | 76% |
| 58 | 84% |
| 59 | 92% |
| 60 | 100% |
Where the PBGF does not apply, benefits are generally paid out of the pension plan at the funded level of the plan.
11. Does the Pension Benefits Guarantee Fund (“PBGF”) protect all pension plans?
The PBGF provides limited protection for most members who were employed in Ontario, in most single-employer defined-benefit registered pension plans.
No PBGF coverage is provided for:
12. I have moved or my marital status has changed. Do I need to provide you with this new information?
To make sure you continue to receive information about your pension entitlement, it is very important that you tell us when your contact information (such as your address) changes.
It is also very important that you tell us if your marital status changes during the course of the wind up so we can make sure we treat your entitlement correctly according to the applicable pension legislation and regulations.
Please contact us immediately if your contact information or marital status changes.