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Pensions Division |
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Excess Member
Contributions |
Section 31 of The
Pension Benefits Act, 1992 provides, that where a member of a defined benefit pension
plan is required to make contributions to the plan, those contributions may not fund more
than fifty per cent of the cost of the commuted value of the member's pension. This is
known as the 50 per cent rule, and is applied upon termination of membership in the plan.
The plan administrator is responsible for calculating the
commuted value of the member's defined benefit pension at termination. If it is found that
member contributions exceed 50 per cent of that amount, then the excess contributions may
be returned to the member or transferred to a registered retirement savings plan, another
pension plan or be used to purchase a deferred or immediate pension.
Please refer to our bulletin, "Understanding The Pension Benefits Act,
1992: A Guide for Members" for additional information concerning the 50 per cent
rule.
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