The Financial Services Commission of Ontario has published a policy clarifying the recalculation of pension plan transfer values when individuals move firms. The policy takes effect August 1.

Since January 1988, the Ontario Pension Benefits Act has provided mandatory portability rights for individual pension plan members on termination of employment and wind-up of a pension plan. Plan members are entitled to transfer the commuted value of their deferred pension to another pension fund if the administrator of that plan agrees to accept the transfer. Otherwise members can transfer the commuted value into a prescribed retirement savings arrangement or use the commuted value to purchase a life annuity.

The new policy deals with the recalculation of transfer values when time elapses between the date of computation and the date of transfer.

When calculating a commuted value to be transferred the PBA requires that the commuted value shall not be less than the value determined in accordance with the guiding policy issued by the Canadian Institute of Actuaries in 1993.