The Change in Retirement Age & the Great Unknown
Kevin Routley, Partner, Employee Benefits & Pensions
The one certainty regarding retirement is the fact that everyone that lives long enough will have to consider when they will begin life in the “golden years”. Until now, the government has provided a timeline with the mandatory retirement age in Ontario being 65 years.
Many collective agreements are built around this age as are many employee benefit programs, pensions and social services. With the government proposing (it is all but a done deal) a change in the mandatory retirement age, many employers with benefit programs and pension plans are left with the decision of what to do with their program to accommodate this change in government legislation.
We all know many employees who have continued to work beyond age 65 and the prospects look good that many more will continue to work beyond age 65 in the future due to economic reasons, personal choice, health and the fact that the aging workforce cannot be replaced in intellectual capacity nor body count. There just are not enough people to fill all the positions of baby-boomer retirees.
This leaves many employees with great opportunity in the future (provided they want to continue to work) and many employers to question what they should do with their employee benefit and pension programs.
The best advice to many employers is to wait! Outside the fear-mongering of many, the government is not proposing any mandatory changes to current benefit or pension standards as outlined at www.labour.gov.on.ca . The change of legislation deals with mandatory retirement and will allow a transition period of one year for employers to comply. Collective agreements and labour practices will need to be addressed but the government is not proposing to effect any change to existing employee benefit or pension programs. Currently, under the Employment Standards Act, 2000, employers are prohibited from discriminating on the basis of age in providing benefits to employees aged 18 to 64. This provision would remain in place following the coming-into-force of legislation to end mandatory retirement.
Remember this is a Provincial government change of law. The federal government has not moved on the issue. Until the Federal government moves on this retirement age, there will be too many questions unanswered. Will they change the date of CPP eligibility?
We suggest you wait and see what the government does before making any changes to a benefit program. You likely do not have to make any immediate changes anyway!! The government has allowed for a one year transition into this change after the law receives royal assent so there will be time to develop policies and procedures around the change. Insurers have been nimble in the past to government changes and we cannot see them being caught off guard with changes to the retirement age. In the past we were all able to guarantee ourselves 3 things in life: retirement, death and taxes. It appears the government will address one of these issues but it still continues to be the great unknown for many of us until they do!!
