HR Professional - December/January 2008 - (Page 23)

C OM P E N S AT ION PHASED RETIREMENT PLANS here was a time when working for the same employer for 35 years, getting the “gold watch” and then disappearing from the workforce to live off your nest egg wasn’t just a norm, i it was an ideal. Culturally and legislatively, the aging employee was discouraged from working a p past age 65. Those days are behind us. People live l longer and they work longer. Until recently, plan sponsors have had their h hands tied regarding the locked-in beneﬁts of an a aged employee. Whether the reasons are e economic or social, more and more Canadians are l looking to balance work and play in their golden y years—and Ottawa has responded. BY RALPH CASTELLI T By definition P Phased retirement is a soft retirement option that grants aging employees the freedom to reduce w work hours while collecting a portion of their deﬁned beneﬁt pension plans. Ultimately, the result Plan sponsors, unfettered by legislation, are now free to offer a margin of financial freedom. i is a gradual transition from active work to total retirement from the workforce. While the retired part-timer is not a new ﬁxture i in the Canadian workplace, it existed only in an i informal capacity. ‘‘ Now, employers with a federally registered pension plan have the latitude to keep retired parttimers on the payroll while allowing the employee to both collect a partial pension from their unreduced plan and continue to accrue beneﬁts at the same time. At present, the only provinces that allow phased retirement are Quebec and Alberta. One feature the Quebec provisions boast is the option to begin a phased retirement pension from a deﬁned contribution plan as early as age 55. Quebec, which leads the country in this trend, has had phased retirement provisions in place since 1997 and is the only jurisdiction with phased retirement provisions applying to both deﬁned beneﬁt and deﬁned contribution plans, though some regulations do apply. Manitoba has also introduced legislative amendments currently pending ofﬁcial approval. And while provincial action in the remaining provinces will still be required to allow employers to take advantage of this recent change, the implementation of Bill C-28 is a key factor in eventually making phased retirement a viable option for all aged Canadians. The next step is for the federal and provincial jurisdictions to fully amend their pension legislation to sanction phased retirement provisions. Among other things, the Ofﬁce of Superintendent of Financial Institutions Canada will need to develop regulations regarding the information that employers will have to provide employees considLegislative change I In the 2007 federal budget, the minister of ﬁnance ering this arrangement. tabled new provisions to the Income Tax Act and By removing some of the legislative barriers, R Regulations. This gave plan sponsors the potenthe government has gone a long way in making tial to allow eligible employees to withdraw up to the workplace an age-friendly environment. Plan sponsors, unfettered by legislation, are now free to 60 per cent of their accrued pension beneﬁts or offer a margin of ﬁnancial freedom to the retired receive bridging beneﬁts on a stand-alone basis (taken from the total lifetime pension beneﬁt). part-timer. This unprecedented governmental accommodation is sure to be well received by employThe federal government, in recognition of the n new realities of the Canadian workplace, gave royal ers who have been eager to retain older staff. a assent to the changes under the Federal Pension B Beneﬁts Standards Act in the form of Bill C-28, Ralph Castelli is a manager in legislation and plan governance, group savings and retirement, m making phased retirement a reality. at Standard Life. w w w. H RThoughtLeader. c om D e c e m b e r 2 0 0 8 / J a n u a r y 2 0 0 9 23 ’’ Reaping the rewards http://www.HRThoughtLeader.com

Table of Contents Feed for the Digital Edition of HR Professional - December/January 2008

HR Professional - December/January 2008 Contents Editor's Letter Contributors Leadership Matters Upfront Legal Compensation Human Capital Talent Management The R-Word Speak No Evil On Message Strategy HR 101 Interview with Donna Wilson Off the Shelf The Last Word

HR Professional - December/January 2008

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