Elimination of Mandatory Retirement Implications with Respect to Benefits and Pension
A Report to the McMaster University Faculty Association
Endorsed by the Joint Committee, October 18, 2006
BACKGROUND Effective December 12, 2006 the Ontario Government’s Bill 211 will come into effect eliminating mandatory retirement at age 65. Bill 211 will redefine the prohibition on discrimination based on age in the Human Rights Code (the Code) thereby protecting all persons over age 18 from age discrimination.
The Ontario government’s objective of ending mandatory retirement is reflective of a global trend. Other countries, including the United States, New Zealand and Australia have all prohibited mandatory retirement. A number of provinces in Canada, including Alberta, Manitoba, Quebec and Prince Edward Island have also made mandatory retirement unlawful.
It is noteworthy that while Bill 211 will prohibit mandatory retirement, there are no planned legislative amendments to other federal and provincial laws and regulations, including the Canada Income Tax Act, Canada Pension Plan, Employment Insurance Act, the Ontario Employment Standards Act, the Workplace Safety and Insurance Act, and the Pension Benefits Act. Bill 211 is crafted in such a way that it will remain permissible to treat employees over 65 differently in regard to employee benefit plans, pension plans or group insurance plans.
PURPOSE McMaster faculty members, including our active and retired faculty, regardless of age, are valued and respected members of the University community. This document is provided to members of the McMaster University Faculty Association (MUFA) as a discussion of the benefit and pension implications of Bill 211 at McMaster University.
At McMaster, the elimination of mandatory retirement will result in significant change for employees, as our benefits and pension plans were formulated based upon the premise of retirement at age 65. BENEFIT IMPLICATIONS Benefits will continue for employees past age 65 with some modifications.
Extended Health and Dental Plans MUFA members will continue to be provided coverage under the active faculty extended health and dental plans until their retirement regardless of age. Upon retirement, coverage will be transferred to the appropriate faculty retiree health and dental plans.
Out-of-Province Emergency Medical Insurance Active MUFA members will continue to be eligible for out-of-province emergency medical coverage until December 1st of the calendar year in which the faculty member attains age 69. Coverage is provided by Blue Cross at up to $1 million emergency health insurance, in the event of emergency medical treatment while traveling out of the country.
Effective December 1st of the calendar year in which the faculty members attains age 69, active employees will be eligible for the retiree out-of-country emergency travel benefit which is a $10,000 lifetime benefit.
Salary Continuance (Short term disability) MUFA members will continue to be eligible for McMaster’s salary continuance (short term disability) benefit while actively employed. This provides up to six months salary continuance in the event of illness or disability.
Long Term Disability Participation in this plan will end the June 30th following attainment of age 65, as it does now. This is consistent with other universities in provinces where there is no mandatory retirement. The Long Term Disability plan is an employee paid benefit insured by Sun Life Financial.
Life Insurance MUFA members are eligible to continue to participate in McMaster’s basic group life and optional life plans until December 1st of the calendar year in which they reach age 69. After which time, employees will be eligible for the retiree group life benefit which is a $5,000 lump sum policy.
McMaster’s basic life insurance plan provides a death benefit of up to 175% of salary (to a maximum of $175,000) and is employer paid. The optional life plan is an employee paid plan, with an age banded rate structure. PENSION IMPLICATIONS With the elimination of mandatory retirement many faculty members will choose to continue to work and will continue to contribute to the pension plan beyond age 65.
A faculty member considering their own personal situation is eligible to retire if they meet one of the following criteria:
- Reduced Pension (between ages 55 to 65 and has not reached Rule of 80/85)* or,
- Unreduced Pension (attainment of Rule of 80/85 or at least age 65 – those hired after July 1, 2006 must have two years of Plan membership).
Note: For Pension Plan text purposes Normal Retirement Date will continue to be defined as age 65.
Active faculty choosing to continue their employment beyond age 65 must continue their contributions to the McMaster pension plan. Contributions will continue until retirement, but no later than December 1st of the calendar year in which the faculty member attains age 69. [The Income Tax Act has changed the age to 71 re pension contributions and the collecting of a pension.] At that point, the Income Tax Act requires that a member begin collecting his/her pension. This may impact a faculty member’s total income for the year. Before that date, a faculty member must retire and sever their employment relationship in order to collect their pension benefit.
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* Rule of 80 transition to Rule of 85, as described in the Joint Committee Agreement, dated March 3, 2006.
IMPLICATIONS FOR WORKPLACE SAFETY AND INSURANCE BOARD (WSIB) COVERAGE AND WORKPLACE ACCOMMODATIONS
The Workplace Safety and Insurance Act (WSIA) is designed to help workers who experience an injury or illness due to an accident/incident in the workplace. The WSIA has not been amended as part of the elimination of mandatory retirement. Faculty members over the age of 65 generally have the same rights as do other employees under the Act, with two exceptions:
- Employees over age 63 are eligible for a maximum of two years loss of earnings benefits from WSIB.
- WSIA includes the employers? obligation to re-employ an employee following a workplace injury. This requirement ends on the date the employee reaches age 65.
While WSIA does not require re-employment, the University does have obligations under other statutes. Older employees will not be subject to a lower standard of protection under other Acts. Thus provisions such as the duty to accommodate, as provided under the Ontario Human Rights Code, will apply to all workers over age 65.
QUESTIONS? Where specific individual information is required, faculty members are encouraged to contact:
- Benefits, Workplace Accommodation and WSIB issues: Employee Work-Life Support Services (benefits@mcmaster.ca or ext. 23743)
- Pension and Retirement issues: Retirement Support Services (pension@mcmaster.ca or ext. 24570)