If you belong to a defined benefit pension plan in Ontario, some of your benefits may be protected if your employer goes bankrupt and they don’t have enough in the pension plan to pay your benefits.
Your monthly benefit is $1,500 or less
Your monthly benefit is $1,400. The pension plan has enough assets to pay 70% of those benefits.
Your entire monthly benefit is guaranteed because it’s less than $1,500:
- $980 would come from the assets in the pension plan (70% x $1,400)
- $420 would come from the PBGF
Total monthly benefit: $1,400
Your monthly benefit is more than $1,500
Your monthly benefit is $2,800. The pension plan has enough assets to pay 70% of those benefits.
a) The first $1,500 of your monthly benefit is guaranteed:
- $1,050 would come from the assets in the pension plan (70% x $1,500)
- $450 would come from PBGF
b) For the remaining portion of your monthly benefit, you would receive $910 per month:
- $910 from the assets in the pension plan (70% x $1,300)
- The PBGF does not apply as it only guarantees the first $1,500 payment
Total monthly benefit: $2,410
Some benefits are excluded from the PBGF, including:
- benefit improvements made less than five years before the plan is terminated
- cost-of-living adjustments to protect against future inflation