Wednesday, October 6, 2010

PBGF Top-Up eligibility rules

The Morneau Sobeco web site contains some more detailed information on the eligibility of retirees for the Ontario PBGF top-up. For people who terminated employment with Nortel Canada the rules shown below apply.

I am not sure what that means in terms of people who transferred from Nortel Canada to Nortel US and changed their pension plans from the Canadian plan to the US plan. It could be interpreted that transferring from Nortel Canada to join Nortel US was the same as if you had terminated employment with Nortel Canada and been rehired by Nortel US. If that is the case then the following rules may apply to those of who transferred.

In many cases we left Nortel before 1987 and many of us were under 45 years of age at the time of transfer, so that we may not receive any top-up for the Ontario service we had in Nortel's employment.

The rules listed are :

■Where a former member terminated employment prior to 1987...
The PBGF will only apply if the former member was at least 45 years of age and had at least ten years of continuous employment or ten years of continuous pension plan membership at their date of termination from the plan.

■Where a former member terminates employment after 1986...

The PBGF will partially apply only if the former member’s age plus years of employment or pension plan membership equals at least 50 at their date of termination from the plan. If age and service equal 60 or more, the member is eligible for full coverage of the eligible portion of his or her pension. The actual percentage of eligible benefits covered by the PBGF if age and service total between 50 and 60, will vary as shown in the following examples:

Age + Service % of Eligible Benefits Guaranteed
(to a maximum of $1,000 per month)
50 20%
51 28%
52 36%
53 44%
54 52%
55 60%
56 68%
57 76%
58 84%
59 92%
60 100%

Where the PBGF does not apply, benefits are generally paid out of the pension plan at the funded level of the plan.

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