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Responsibilities | Pension Plans
FAQs
Frequently Asked Questions
The Pension Benefits Standards Act of British Columbia (the "PBSA") is designed to protect the interests of British Columbia pension plan members. It provides minimum standards for every employment pension plan in such areas as eligibility, vesting, and portability. The PBSA also sets out solvency and investment rules for some types of plans. The following are some commonly asked questions about the PBSA, and how it is applied.
Q. Does the PBSA require my employer to set up a pension plan?
A. No. Establishment of a pension plan is voluntary. The PBSA applies only to an employer who already has a pension plan in place, or sets up a new plan.
Q. When am I eligible to join my employer's pension plan?
A. The PBSA entitles you to join if
- you have worked for your employer for 2 continuous years,
- you have earned a minimum amount in each of 2 consecutive calendar years ($14,385 in 2005, $14,175 in 2004, $13,965 in 2003, $13,685 in 2002, $13,405 in 2001, $13,160 in 2000, and $13,090 in 1999), and
You may be allowed, or possibly required, to join your plan sooner than the 2 year standard provided by the PBSA.
Q. Are part-time or casual employees eligible to join the pension plan?
A. Yes, they are eligible if they meet the qualifications outlined above.
Q. Is membership in the pension plan automatic?
A. Not necessarily. If you think you may be eligible to join, contact your employer, plan administrator, or your union representative. You may be required to fill in an application form in order to join the plan.
Q. How can I get information about a pension plan so that I can decide whether or not I would like to join?
A. The plan is required to provide an explanation or summary of the plan to each employee at least 30 days before the employee first becomes eligible, or is required to be a member of that plan. In the case of a new plan, the information must be provided within 120 days after the establishment of the plan.
Q. If a pension plan is available, do I have to join?
A. The PBSA does not require you to join your pension plan. Your employer, however, may require you to join as a condition of your employment.
Q. What is the earliest age at which I can retire and still receive a full pension?
A. Each pension plan must specify a normal retirement age, the age at which a person can retire and receive a full pension. The majority of plans set this at age 65, but some allow a full pension as early as age 60, or even earlier if you meet certain qualifications. The federal Income Tax Act requires a reduction to the amount of the monthly pension for pensions that start to be paid prior to age 60.
Q. Can I retire before age 65?
A. Yes. The PBSA entitles you to elect to start receiving early retirement benefits as soon as you are age 55 and have been a member of the plan for at least two years. The amount you receive each month, however, may be reduced to compensate for the fact you will likely receive pension payments for a longer period of time.
Q. Can I keep working and contributing past normal retirement age?
A. Yes, you may continue working if your employer permits you to do so. If you continue working, you will continue to earn pension benefits. Your pension plan, however, may stipulate a maximum number of years you can earn benefits under the plan, or a maximum pension that can be earned. Some plans may allow you to start receiving your pension after normal retirement age instead of earning more pension benefits. Your pension payments must commence no later than the end of the calendar year in which you turn 69.
Q. What does "vested" mean?
A. If your pension is "vested", it means that you are unconditionally entitled to receive a pension, either now or in the future, even if you terminate your employment before retirement age. Once you become vested you are entitled to either an immediate or deferred pension, as opposed to simply a return of your own contributions. Being vested also implies that you get the benefit of your employer's contributions as opposed to just your own contributions.
Q. What does "locked-in" mean?
A. Vested pension benefits, resulting from contributions made to the pension plan after 1992, may not be withdrawn as a lump sum, and must be used to provide retirement income.
Q. When are my pension benefits vested?
A. The PBSA requires that pension benefits become vested as soon as the member has completed 2 years of continuous plan membership. Once vested, the member is vested for all periods of plan membership, without regard to whether the contributions or periods of employment were before or after January 1, 1993. Some plans provide for vesting at earlier than 2 years. Benefits become fully vested if your pension plan is terminated. Benefits are also vested at the age you would be eligible to receive a full pension e.g. age 65 for most plans.
Q. What are my options if my membership in the plan terminates?
A. You may leave the benefits in your employer's pension plan, and start receiving the pension once you get to the age at which you are eligible to commence receiving payments. This option is valuable as it may allow you to participate in future benefit improvements under the plan.
If you quit or lose your job before your pension is vested, you can get back any money you paid into the plan, with interest. You may not be entitled to money your employer has paid into the plan on your behalf.
If, however, you quit or lose your job after your pension is vested you have the option to transfer the value of your vested entitlement out of the pension plan. If you are a member of a defined benefit plan, and you terminate at age 55 or later, the plan does not have to permit you to transfer benefits out of the plan.
If you opt to transfer your benefits out of the plan, you can transfer them to your new employer's plan, as long as your new employer's plan will accept the transfer. You also have the option to transfer the value of your benefits to a locked-in RRSP, to a life income fund (a "LIF"), or to an insurance company to buy an annuity.
The portion of the benefits resulting from employment before 1993 may be received in a lump sum, by a terminating plan member, if the pension plan does not require that these be locked-in.
Q. If I transfer my benefits out of the pension plan how long do they remain locked-in?
A. Your benefits will always be locked-in, meaning that the money must only be used for the purposes of providing a stream of retirement income.
Q. If I transfer benefits out of the pension plan, when can I start receiving monthly payments?
A. If you transfer the money to a locked-in RRSP, in order to start receiving payments it must be further transferred to a life income fund (a "LIF"), used to purchase an annuity, or transferred to another pension plan. In the case of a LIF and an annuity, the payments can start when you reach the age at which you could have started receiving payments under the pension plan the money was transferred out of (age 55 under most plans). If you transfer the money to another pension plan the money becomes subject to the provisions of the new plan.
Q. I will be retiring soon. Why does the PBSA require me to select a joint and survivor pension when I retire?
A. In the past, some pension plans guaranteed payment only so long as the pensioner lived, leaving the surviving spouse with little or no income. A joint and survivor pension ensures that your spouse will receive at least 60% of your monthly pension payments, should you die first.
Q. Can I waive the right to joint and survivor form for my pension?
A. No. Only your spouse can waive his/her rights to a joint pension. To waive his/her rights your spouse must sign an approved form (Form 2), in the presence of a witness, no more than 90 days before you start to receive the pension. You are not permitted to be present when your spouse signs this form.
Q. I have been living with my partner for 3 years. Is he/she considered to be my "spouse"?
A. Yes. The PBSA def ines a spouse to be a person who, at the time
- was married to and living with you, or if recently separated had been separated from you for less than 2 years, or
- the person with whom you have been living and cohabiting, in a marriage-like relationship, for at least two years, including a marriage-like relationship between persons of the same gender.
Q. My spouse and I are separated. Is he/she entitled to any of my pension benefits?
A. Pensions are a "family asset" under the province's Family Relations Act. The division of family assets, including pension credits, comes under that legislation. Part 6 of the Family Relations Act provides detailed procedures for valuing and dividing a pension after a marriage breakdown. Matrimonial property orders made by a court in British Columbia or elsewhere in Canada are enforceable against pension assets or payments.
Q. My spouse has died. He/she was not yet receiving a pension, but was vested in his/her pension plan. Will I receive any benefits?
A. Yes, the amount you receive will depend on the type of pension plan that your spouse belonged to and the provisions of that plan.
Q. I am a widow/widower, and am receiving a survivor pension. Will I lose my pension if I remarry?
A. No. Survivor benefits do not cease upon remarriage.
Q. Can my work pension be reduced once I start receiving Canada Pension Plan ("CPP") benefits?
A. Yes, if you have elected a pension adjusted for CPP pension payments, and your plan provides for this. The PBSA, however, limits the amount by which your pension can be reduced.
Q. Can my work pension be reduced when I start receiving Old Age Security ("OAS") payments at age 65?
A. For pensions earned for service before January 1, 1993, your pension may be adjusted for your Old Age Security payments. For pensions earned for service after January 1, 1993, your pension may not be adjusted by your OAS payments, unless you elect this option, at the time you retire. If you elect this option, you will receive higher payments from your work pension until you start receiving OAS payments. Once you start receiving OAS payments, your work pension will be reduced so as to maintain a level income.
Q. Can my pension plan have different requirements for plan membership, contributions, or plan options for men and women?
A. No. Sex discrimination by plans is prohibited by the PBSA. This also applies to annuities purchased with funds from a pension plan.
Q. My employer went bankrupt. What happens to our pensions?
A. If you belong to a defined benefit plan which is fully funded, your benefits are not affected. If the plan is not fully funded, the member's benefits will be reduced, as provided in the PBSA and the plan.
If you belong to a defined contribution plan, your benefits are not likely to be affected by a bankruptcy, unless current contributions to the plan have not been remitted by your employer. Also, benefits may have to be reduced slightly to cover the costs associated with the windup.
Q. Is my pension fully guaranteed?
A. Pensions are not guaranteed by this or any other legislation. The PBSA requires plan sponsors to adequately fund all benefits earned by members, and to make special payments to make up any funding shortfalls. The PBSA also restricts how pension funds may be invested, in order to safeguard members' benefits. The PBSA requires pension funds to be held by an authorized fund holder, such as a trust company, group of trustees or life insurance company.
Q. I can't seem to get any information about my benefits or entitlements under the pension plan. Who do I talk to?
A. You should write to your plan administrator indicating that you are entitled to pension information under section 10 of the PBSA. You may also get information from your employer, or your union representative. If you are unable to get the information required under the PBSA, write to the the Pensions Department of the Financial Institutions Commission ("FICOM"), which will investigate on your behalf.
Q. Does the PBSA apply to Canada Pension Plan ("CPP") and Old Age Security ("OAS") payments?
A. No. Both the Canada Pension Plan and Old Age Security Act are administered by the federal government. For further information, contact Human Resources and Development Canada (1 800 277-9914, or 1 800 343-8282 from outside Canada).
Q. Where can I get further information?
A. For more information about the Pension Benefits Standards Act, please contact:
Deputy Superintendent, Pensions
Pensions Department
Financial Institutions Commission
Suite 1200 - 13450 102nd Avenue
Surrey, British Columbia, V3T 5X3
Telephone: 604 953-5200, Fax: 604 953-5301
Email: FICOM@ficombc.ca
Here is a map showing the location of the office.
Copies of the Pension Benefits Standards Act and Pension Benefits Standards Regulation may be obtained from:
Crown Publications Inc.
521 Fort Street
Victoria, British Columbia V8W 1E7
telephone: 250 386-4636, fax: 250 386-0221
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