On January 1, 2025, Ontario pension law for multi-employer pension plans, such as the NHRIPP, will change. This update will impact how the value of their pension for NHRIPP members who leave the Plan will be calculated. (Members who leave their money in the Plan and receive their retirement benefit as a monthly pension will not be impacted by this change.)
Currently, when an NHRIPP member takes their money out of a plan, the portable commuted value (the amount of money they will receive) is calculated on a solvency basis1 then multiplied by the transfer ratio (the funded level of the Plan on a solvency basis).
On or after January 1, 2025, the commuted value will be calculated on a going concern basis2 and then multiplied by the going concern funded level to a maximum of 100%.
At present, NHRIPP’s going concern funded level is 100%. If that level falls to below 100% (which could happen because of changing interest rates), the value of a member’s pension who decides to leave the Plan will be reduced. In addition, any death benefits3 which are not paid as a pension, will also be paid at the Plan’s going concern funded level, to a maximum of 100%.
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1 Solvency funding assumes a plan was terminated and all benefits were paid immediately.
2 Going concern funding assumes a plan will continue indefinitely.
3 The amount of money paid to a beneficiary if a plan member passes away before they start receiving their pension.
