Amendments to Section 42 of the Pension Benefits Act (PBA) by Bill 120 (the Securing Pension Benefits Now and for the Future Act, 2010), come into effect on January 1, 2015.
Amended section 42(1)(a) and new section 42(1.1) provide for individual transfers between Ontario registered plans and other pension plans including pension plans registered in a designated jurisdiction and pension plans that are not subject to pension legislation but are established or governed by a statute, such as the federal public service pension plan.
Along with the amendments to section 42, section 20(3) of General Regulation 909 has also been amended effective January 1, 2015 to apply only to the transfers under sections 42(1)(b) and (c) of the PBA. Sections 42(1)(b) and (c) relate to the transfer of a commuted value of a deferred pension into a prescribed retirement savings arrangement (e.g. locked-in retirement account, life income fund) or for the purchase of a life annuity, respectively.
For an authorized transfer to a pension plan, the transferring administrator no longer needs to obtain the agreement of the receiving administrator to administer the transferred amount in accordance with the PBA.
However, section 42(1)(a) transfers will only be permitted if the conditions set out in section 42(1.1) have been satisfied, including that the administrator of the other pension plan agrees to accept the payment. Under section 42(1.1), transfers will be permitted only to:
- a pension plan registered under the PBA;
- a pension plan established or governed by a statute in a designated jurisdiction;
- a pension plan registered in a “designated jurisdiction” as defined in section 1(1) of the PBA (i.e. a jurisdiction in Canada, including Canada itself, with legislation in force that is similar to the PBA); or
- a pension plan prescribed for the purposes of this section.
Frequently Asked Questions
Q1. Can an Ontario former member transfer the commuted value of his or her deferred pension to the federal public service pension plan in accordance with section 42(1)(a)?
A1. Yes, if the administrator of the federal public service pension plan agrees to accept the payment. The federal public service pension plan is a pension plan that has been established by a statute in a designated jurisdiction and is eligible to receive the transferred amount under section 42(1.1) of the PBA. –12/2014
Q2. Are there any pension plans that have been prescribed for purposes of transfers under section 42(1)(a)?
A2. No. There are no plans prescribed by regulation for the purposes of such transfers at this time. –12/2014
Q3. I would like to transfer the commuted value of my pension benefit to my new employer’s pension plan. Is the administrator of my new plan required to accept the transfer from my current plan?
A3. No. Section 42(1.1)(b) provides that the commuted value may only be transferred if the administrator of your new plan agrees to accept the transfer. –12/2014
Q4. If the administrator of my new plan agrees to accept the transfer of the commuted value of my pension benefit, is my current plan administrator required to transfer my money to the new plan?
A4. Yes, provided that your new plan meets the requirement under section 42(1.1) of the PBA and you have elected to transfer your commuted value within the timeframe permitted under the legislation. –12/2014
Q5. I am currently an employee of the Federal Government. I was an Ontario member of a pension plan that is registered with the Financial Services Commission of Ontario, and I elected to leave my pension in that plan when I left employment to work for the Federal Government. If the federal public service pension plan is willing to accept the transfer of my deferred pension under the Ontario plan, is the Ontario plan administrator required to transfer my money?
A5. No. You have already made your election to leave your pension benefit under your Ontario plan when you terminated your employment with your prior employer. Your prior administrator is not obligated to give you transfer options again. –12/2014