$5,000 lost due to a year of foregone accrual is typical upon termination from a position providing a defined benefit pension. In a more generous plan, or with an employee who has a higher salary, or who is older, the loss from a foregone year of accrual is typically $10,000.

However, for many defined benefit pension plans registered in Ontario, if the plan member has been terminated by their employer on or after July 1, 2012, rather than voluntarily resigning, and if the plan member’s age plus service at termination added to at least 55, then for the purposes of entitlement to subsidized early retirement benefits, but not for future accrual, they are deemed to continue to be actively employed until retirement.

In a plan with generous early retirement benefits, this may have a dramatic impact, potentially even doubling the value of the already existent pension. This can occur even in Ontario registered plans not subject to the 55 factor “grow-in”, or in plans not regulated under the Ontario Pension Benefits Act.

If a member was at the cusp of the age at which they would qualify for any subsidized early retirement, typically 55 or sometimes 60, an extended notice period can take them over this cusp and also lead to an increase in the value of existing pension of as much as double.  

Our background, with over 10 years of specializing in valuing pensions on marriage breakdown in Ontario, and with 3 years of experience working in the Pensions Branch of the Financial Services Commission, has equipped us to assist you in defining these losses.

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