Bill 54, Retirement Savings Plans for Employees and Self-Employed Persons Act, 2010

Bill 54 2010

An Act respecting retirement savings plans for employees and for self-employed persons

Note:  This Act amends or repeals more than one Act.  For the legislative history of these Acts, see the Table of Consolidated Public Statutes – Detailed Legislative History at www.e-Laws.gov.on.ca.

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

Employment Standards Act, 2000

   1.  Part XIII (Benefit Plans) of the Employment Standards Act, 2000 is amended by adding the following section:

Mandatory retirement savings plan

   44.1  (1)  Every employer that has 20 or more employees in Ontario shall provide a retirement savings plan for employees, and may provide different plans for different classes of employees.

Type of plan

   (2)  A retirement savings plan may be a group registered retirement savings plan or it may be a pension plan, a multi-employer pension plan or a defined contribution multi-employer pension plan within the meaning of the Pension Benefits Act.

Membership in the plan

   (3)  Every employee becomes a member of the retirement savings plan immediately upon becoming employed, but the employee may terminate his or her membership in the plan at any time if he or she notifies the employer in writing.

Exception

   (4)  Despite subsection (3), an employee is not entitled to terminate his or her membership in the retirement savings plan if the Pension Benefits Act applies to the plan and the termination would contravene that Act.

Contributions by members

   (5)  An employee who is a member of the retirement savings plan shall contribute to it in accordance with the terms of the plan, and the employer may deduct the contributions from the employee's wages and make the contributions to the plan on the employee's behalf.

Contributions by employers

   (6)  The employer shall contribute to the retirement savings plan if required to do so by the terms of the plan, but employer contributions are not otherwise required.

Periodic increases in contribution rate

   (7)  The terms of a retirement savings plan may provide for a periodic increase in a member's contribution rate, expressed as a percentage of the member's wages, until the member's annual contribution level reaches a specified maximum percentage or amount.

Pension Benefits Act

   2.  (1)  Subsection 1 (1) of the Pension Benefits Act is amended by adding the following definition:

"defined contribution multi-employer pension plan" means a pension plan described in subsection (5); ("régime de retraite interentreprises à cotisation déterminée")

   (2)  The definition of "multi-employer pension plan" in subsection 1 (1) of the Act is repealed and the following substituted:

"multi-employer pension plan" means a pension plan described in subsection (3) but does not include a defined contribution multi-employer pension plan described in subsection (5); ("régime de retraite interentreprises")

   (3)  Section 1 of the Act is amended by adding the following subsections:

Defined contribution multi-employer pension plan

   (5)  For the purposes of this Act, a pension plan is a defined contribution multi-employer pension plan if it has the following characteristics:

    1.  It is established and administered by an insurer licensed under the Insurance Act or by a prescribed type of financial institution.

    2.  It provides defined contribution benefits.

    3.  One or more employers, or classes of employers, may register with the insurer or financial institution as participating employers in the plan.  Sole proprietorships and partnerships may also register as participating employers in the plan.

    4.  Membership in the plan is available to employees, or classes of employees, of the participating employers.  For this purpose, the proprietor of a sole proprietorship and the partners of a partnership are deemed to be employees.

    5.  The members make contributions under the plan.

    6.  The participating employers may make contributions under the plan in respect of their employees.

    7.  If the Income Tax Act (Canada) so provides, the contributions, if any, made by a participating employer in respect of a member are locked in until the member is eligible to begin to receive pension benefits under the plan.

Same

   (6)  Despite clause (c) of the definition of "pension plan" in subsection 1 (1), a defined contribution multi-employer pension plan is a pension plan for the purposes of this Act even if all pension benefits are provided by contributions made by its members.

   3.  Subsection 8 (1) of the Act is amended by adding the following clause:

(e.1) if the pension plan is a defined contribution multi-employer pension plan, the insurer or prescribed financial institution that established the plan;

Commencement and Short Title

Commencement

   4.  (1)  Subject to subsection (2), this Act comes into force on the day it receives Royal Assent.

Same

   (2)  Section 1 comes into force six months after the day this Act receives Royal Assent.

Short title

   5.  The short title of this Act is the Retirement Savings Plans for Employees and Self-Employed Persons Act, 2010.

 

EXPLANATORY NOTE

Under a new section 44.1 of the Employment Standards Act, 2000, employers with 20 or more employees in Ontario are required to provide a retirement savings plan for their employees.  Details are set out concerning the types of retirement savings plan that are permitted.  When employees are hired, they automatically become members of the plan and are required to make contributions.  However, employees may opt out of the plan at any time.  The terms of the plan may provide for periodic increases in a plan member's annual contribution rate up to a specified maximum rate or amount.

Amendments to the Pension Benefits Act authorize the establishment of a new type of pension plan, called a "defined contribution multi-employer pension plan".  This type of pension plan must be established and administered by an insurer or a prescribed type of financial institution.  The pension plan must provide defined contribution benefits.  Employers may register as participating employers in the pension plan.  Sole proprietorships and partnerships may also register as participating employers.  Membership in the plan is available to employees of the participating employers and is also available to the proprietor of a sole proprietorship and the partners of a partnership.  Employer contributions to the pension plan, if any, are locked in if the Income Tax Act (Canada) so provides.