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Making Friends with Benefits … and Compensation

Understanding Employee Benefits and Pensions Compliance

Does Anybody Even Remember those Freedom 55 Ads?

Posted in Government, Group Benefits, Pension, Retirement

On March 29, 2012 the Federal Government released its 2012 Budget. One of the measures adopted by the Government to tackle the budget deficit is a proposal to gradually increase the age of eligibility for Old Age Security (OAS) benefits from 65 to 67 years of age.

The change is consistent with the current global trend to raise age eligibility for public pension programs. In fact, a number of OECD countries have recently announced similar increases, including the United States, the United Kingdom, and France.

The Canadian Government’s rationale for this change is partly based on the fact that life expectancy of Canadian men and women has increased considerably since the introduction of the OAS benefit in the 1970s. In addition, as baby boomers are progressively reaching retirement age, the ratio of working-age people to seniors is shifting and the cost of the OAS program is expected to increase from $38 billion in 2011 to $108 billion in 2030.

The Budget contained similar age eligibility increases for Guaranteed Income Supplement (GIS) benefits, which are provided in addition to OAS benefits for low-income seniors.

The announced changes will be gradually implemented over a period of six years, starting on April 1, 2023, and will target people born on or after April 1, 1958, in the case of OAS and GIS benefits. Canadians who wish to work past the age of 65 will also be afforded more flexibility, starting on July 1, 2013. The Government will allow them to defer their OAS pension for up to five years beyond the age of retirement, and receive a higher annual pension afterwards. However, this will not result in adjusted GIS benefits.

This is the beginning of a long-term relationship with increased retirement ages. Decades from now, you’ll remember this post.


Work is Stressing Your Employees Out? Benefits or Not?

Posted in Benefits, WSIB

WSIB Benefits Can be Available When the Claim is that Work is Stressing the Employee

It’s really hard to make friends with this topic because stress related disability claims are always a thorny topic – particularly when raised during a performance review.

Work-related stress claims are on the rise.  Each year work-related stress claims are made under human rights complaints, disability benefits insurance or sick leave, or claims for damages as a result of a wrongful dismissal.

Under the Workplace Safety and Insurance Act benefits for mental stress arising in the course of employment will only be granted to an employee when the stress suffered is severe and caused by a “sudden and unexpected traumatic event” arising in the employment context.

According to the Workplace Safety and Insurance Board Guidelines, events such as a criminal act, harassment, or an accident, where there is actual or perceived threat of death or injury to the worker, a co-worker, or to their family members, can constitute a traumatic event for the employee. However, the employee must have first hand knowledge of the events, either having suffered or witnessed it herself, or by having heard about it directly from a traumatized individual.

WSIA benefits are not available for work-related stress caused by an employer’s day-to-day employment decisions, such as changing an employee’s job assignment, working conditions or productivity expectations, or else, a decision to discipline or terminate the employee. However, an employer’s decisions or actions that involve violence or threats of violence are beyond the normal course of employment, and employees are entitled to benefits for the stress caused by those actions.

The WSIB Traumatic Mental Stress Guidelines are available at http://www.wsib.on.ca/portal/server.pt/community/WSIB/230/OPMDetail/24347?vgnextoid=7d12ae75e15d7210VgnVCM100000449c710aRCRD.

In my experience WSIB stress claim are rare since employees will typically accesss short and long term disability benefit plans. How does your HR team assist employees through the stress claim process?


Breaking up with your Employees Just Got More Expensive

Posted in Benefits

Effective July 1, 2012, grow-in benefits will be available on all terminations of employment without “cause”. This change was introduced by Bill 236, as part of the Ontario pension reform.

Grow-in benefits are special early retirement rights available to members of pension plans with enhanced early retirement benefits and who meet certain eligibility requirements of age plus service. Prior to the amendment, these benefits were triggered only by full or partial wind up of a pension plan.

The change will have the effect of expanding grow-in benefits to all employees terminated without cause on or after July 1, 2012. In other words, only employees who were terminated for serious misconduct, insubordination or negligence, or who resign from employment, will be excluded from the right to grow-in benefits. Employees terminated without cause will also be entitled to bridging benefits if they have been members of the pension plan for at least 10 years at the time of termination.

There are some exceptions to the application of the new grow-in rules.  Certain exceptions apply. In the case a jointly sponsored pension plan, employers and members of the plan can decide to exclude their pension plan from the application of the provision. The same flexibility is available to administrators of multi-employer plans.

Some commentators have suggested that this change will make plan sponsors reconsider the early retirement provisions under their defined benefit pension plans. Would you consider amending your defined benefit plan to avoid the increased cost of involuntary terminations?

Breaking Up Used to Be So Hard to Do!

Posted in Family Law, Pension

New Marriage Breakdown Rules for Division of Pension Assets

On January 1, 2012, new rules for the valuation and division of pension assets upon marriage breakdown came into force. The changes are intended to simplify the division of pension assets and only apply to spouses who obtained a court order, family arbitration award, or a domestic contract dated on or after January 1, 2012, which deals with the division of pension assets following the breakdown of their relationship. Key changes to the family law regime deal with the payment of pension assets, the method of valuation and division, and the forms that must be used throughout the process.

Under the old rules, payment of the divided pension asset was only triggered when one of the following events occurred: termination of employment or plan membership; retirement; death; or winding up of the pension plan.

By contrast, spouses covered by the new rules can obtain an immediate settlement of the pension assets. In addition, spouses may now rely on the plan administrator, as opposed to an independent actuary, to determine the valuation of their pension assets, which is also referred to as the ‘Family Law Value’. Finally, under the new rules, spouses must use FSCO’s Superintendent approved forms in order to complete the process of valuation and division of their pension assets.

Despite those significant changes, the following guiding principles remain the same under the new rules:  pension assets may be divided upon marriage breakdown; a maximum of 50% of the pension assets accrued during the marriage may be assigned to the plan member’s former spouse; and, the former spouse’s share of the pension assets will remain locked-in, with the exception of specific situations.

Now that you’ve been introduced to the new process, what hurdles do you anticipate or have already overcome? Post them here.


Hello World! Let’s Make Friends.

Posted in Benefits, Compensation

Benefit and compensation plans can sometimes seem complex and daunting, but with a little time and attention they can be simple to understand ….and can be one of your most powerful tools in attracting and retaining talent/employees.

My job, with this blog, is to make it even more simple; raise current issues in the field;  draw attention to new developments and engage in discussions on best practices.

Let me know about challenges or creative solutions and trends that you are seeing in the field too…this way we can share and learn together.