Divestments - Section 80
If you change employers under a divestment, and your new employer offers HOOPP to all new employees, you enrol in HOOPP right away, whether you work full time or part time.
A divestment can occur when:
- all or part of a business is sold, assigned, disposed, or transferred from one employer to another
- a service offered by an employer is “contracted out” to a new entity that offers a registered pension plan
- two or more organizations amalgamate, or
- existing, independent organizations are brought under a single organizational umbrella
Special protections under Section 80
Special pension protections apply when you join HOOPP due to a divestment. These rules are set out in Section 80 of Ontario’s Pension Benefits Act.
How the protections work
For pension purposes, your period of employment with your former employer is deemed to be unbroken until you terminate employment with the HOOPP employer you were transferred to.
This means that when HOOPP determines the benefit you are entitled to receive, we will take into account your period of membership with your former employer’s pension plan. That plan, in turn, must consider your period of employment with the HOOPP employer you were divested to when determining your pension.
Example of Section 80 protections
Louise is one of 20 employees of Centreville Clinic (and a member of the ABC pension plan) who, due to a divestment, has become employed at Northview Hospital . Northview offers HOOPP to all its employees.
At the time of transfer, Louise had 16 years of membership with the ABC plan. She joins HOOPP immediately on the transfer date. When she does, HOOPP must recognize her period of membership with the ABC plan when determining her eligibility for HOOPP benefits. ABC, in turn, must recognize Louise’s period of employment with the Northview Hospital when determining what benefits she is eligible for under the ABC plan.
If Louise keeps working for 14 years and then retires, she’ll receive two pensions – one from HOOPP and one from the ABC plan. Her HOOPP pension will be based on 14 years of contributory service, her ABC plan will be based on 16 years of membership. However, she will have completed 30 years of combined HOOPP eligibility service – 16 years from the ABC plan plus 14 years in HOOPP.
While eligibility service isn’t used in the formula that determines the amount of your HOOPP benefit, it is important in determining whether or not early retirement reductions will be applied to your HOOPP pension and how much they will be. For example, after 30 years of eligibility service, a member can retire with an unreduced pension, as early as age 55.
Important points about Section 80 protections
- When you join HOOPP under a divestment, HOOPP’s usual portability provisions, which allow individual members to transfer pension service from their former pension plan to HOOPP, do not apply.
- You won’t be able to receive termination or retirement benefits from your former employer’s pension plan until you terminate or retire from the HOOPP employer you were transferred to as a result of the divestment.
- If you terminate from the employer you were divested to, the "protected period" ends. This means you would be eligible for termination benefits from both HOOPP and your previous pension plan. If you subsequently enrol at another HOOPP employer, you would be able to transfer your benefits from your pre-divestment employer into HOOPP – and your HOOPP eligibility service would include your membership with your previous pension plan.
- Under HOOPP, you are entitled to a pension benefit once you are vested, which usually means after you have belonged to the Plan for two or more years. In a divestment, the period of time you belonged to your previous employer’s pension plan counts towards the two-year vesting total.
