Vesting (pension plan)
Vesting, in a pension plan, is a member’s right to keep the pension benefit earned so far after leaving. The federal pension standards Act requires a plan to give a member who ceases membership a deferred pension, and Ontario’s Pension Benefits Act gives one to a member who terminates employment, subject to exceptions.
In a sale where the seller sponsors a pension plan, vesting answers which employees keep what they have accrued. It sits next to the pension or benefits plan question and the registered pension plan entry.
What the statutes say
The federal Pension Benefits Standards Act, 1985, s.17, headed as a vesting provision, requires a plan to give any member, on cessation of membership, a deferred pension benefit based on the member’s period of employment and salary up to that time. Ontario’s Pension Benefits Act, s.37, entitles a member who terminates employment before the normal retirement date to a deferred pension for employment after 1986, subject to the exceptions in that section.
What to ask
- Which statute governs the plan, federal or a province’s
- Which members have accrued benefits and what the plan text says about them
- Whether the plan is ending, which links to pension plan wind-up
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Government of Canada (Department of Justice)GovernmentPension Benefits Standards Act, 1985, s. 17 (provision respecting vesting)
- 02Government of OntarioGovernmentPension Benefits Act, R.S.O. 1990, c. P.8
- 03Government of Canada (Department of Justice)GovernmentPension Benefits Standards Act, 1985, R.S.C. 1985, c. 32 (2nd Supp.)
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