Change in Employer’s Pension Plan - Section 81
Members

Change in Employer’s Pension Plan - Section 81

If your employer changes the pension plan offered to employees to HOOPP from some other plan, you enrol in HOOPP right away, whether you work full time or part time.

Special protections under Section 81

Special pension protections apply when you join HOOPP due to a change in your employer’s pension plan; these rules are set out in Section 81 of Ontario’s Pension Benefits Act.

Here’s how the protections work. For pension purposes, your period of membership in your employer’s former pension plan will be deemed to have continued as of the date your employer switched pension plans to HOOPP.

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 pension plan. That plan, in turn, must consider your period of membership in HOOPP when determining your benefit with them.

Example of Section 81 protections

Sarah is one of 20 employees of County Hospital and a current member of the DEF plan. County Hospital is making HOOPP the pension plan for its employees.

At the time of transfer, Sarah had 20 years of membership with the DEF plan. She joins HOOPP immediately. When she does, HOOPP must continue to recognize the period of time she was a member of the DEF plan when determining her eligibility for HOOPP benefits. DEF, in turn, must recognize Sarah’s period of membership with HOOPP when determining what benefits she is eligible for under the DEF plan.

If Sarah keeps working for 10 years and then retires, she’ll receive two pensions – one from HOOPP and one from the DEF plan. Her HOOPP pension will be based on 10 years of contributory service, her DEF plan will be based on 20 years of membership. However, she will have 30 years of combined HOOPP eligibility service – 20 years with the DEF plan plus 10 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 81 protections

  • If your employer changes from some other pension plan to HOOPP, 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 employer’s former pension plan until you terminate or retire from HOOPP.
  • If you terminate employment, after the change to HOOPP, and enrol at another employer that offers HOOPP, the "protected period" can continue if you elect the "decision pending option." Otherwise, regular terminations options exist.
  • If you are on a leave from your former pension plan at the time of the change to HOOPP, the date of the change in plans is considered to be the start of your leave, for HOOPP purposes. That date is also your date of enrolment in HOOPP. If you join HOOPP while on a health leave, you must make contributions during the first 15 weeks in HOOPP to be eligible to apply for HOOPP’s disability benefits.
  • Under HOOPP, you are entitled to a pension benefit once you are vested, which usually occurs after you have belonged to the Plan for two or more years. In this situation, the period of time you were eligible for benefits from your former pension plan counts towards the two-year vesting total.