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Canada
New law on phased retirement approved
Workers who choose to phase in their retirement will be eligible to receive pension payments and continue to accrue benefits under broader budget legislation approved by the Canadian government on December 14, 2007. The new law, effective immediately, could provide a valuable financial tool to help employers compete in a tight labor market and retain skilled workers.
The law gives workers in defined benefit registered pension plans the right to receive bridging benefits on a stand-alone basis or up to 60 percent of their accrued pension while they continue to accrue additional benefits. The 60 percent limit will be based on the amount of lifetime pension benefits (and bridging benefits) that the employee would receive if he or she was taking full retirement.
The amendments do not tie the ability to receive partial pensions to a reduction in work time or salaries, as was mandated by previously approved phased retirement provisions in Alberta, Manitoba and Quebec. A main drawback of those provincial plans was that they required workers to commute part of their normal retirement benefit and take the value as a lump sum.
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December,
2007
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