The Pension Benefits Guarantee Fund
If you belong to a defined benefit pension plan and your employer becomes insolvent or bankrupt, there may not be enough money in the pension fund to pay all of the pension benefits that were promised to you. The Pension Benefits Guarantee Fund (PBGF) may then apply to guarantee payment of certain benefits from your pension plan.
The PBGF is a special fund that was established by the Government of Ontario to cover pension benefits for certain defined benefit pension plans if they are wound up, because the employer is insolvent and there is a funding shortage.
How the PBGF is Funded
The PBGF is funded by certain employers who sponsor defined benefit pension plans and qualify for this coverage. They are responsible for making yearly payments into the PBGF, based on the pension plan’s financial status and the number of Ontario plan beneficiaries who are part of the pension plan.
It is important to know that the PBGF does not cover:
- benefits that are provided by defined contribution pension plans, multi-employer pension plans (MEPPs) and jointly sponsored pension plans (JSPPs) ;
- benefits for certain public sector pension plans, designated pension plans and individual pension plans that are defined by the federal Income Tax Act;
- benefits in respect of employment outside of Ontario, or employment that is subject to federal pension regulation;
- benefits that are over $1,000 per month;
- benefits for pension plans that are less than five years old, before the date of the wind up;
- new benefit improvements that came into effect within the last five years, before the date of the wind up; and
- benefits that are provided by pension plans if the employer is only obligated to contribute a limited fixed amount set out in a collective agreement.
For more information, refer to the PBGF web page for plan administrators.