doing business in canada - Davies Ward Phillips & Vineberg LLP

• funding;• eligibility;• pension formula;• pensionable service;• contribution requirements;• vesting and locking-in;• early, normal and postponed retirement;• accrual of benefits and forms of pension;• investing and withdrawing pension fund assets;• transfers of pension fund assets; and• amendments or discontinuance of a pension plan.Employers with operations in more than one province or territory may operate one pension plan that isregistered where the plurality of members work. The pension plan also provides pension benefits with respect tomembers employed in the other provinces or territories.Where an employer provides a registered pension plan to employees, the level of benefits that can be providedfrom the plan is limited by the registration rules of the Income Tax Act. A supplementary arrangement is neededif the pension income that the employer wishes to provide is in excess of that limit.Supplementary pension arrangements are commonly known as Supplementary Executive Retirement Plans("SERPS"), top-up or top-hat plans. These plans may take a variety of forms and may be formal, informal, fundedor unfunded.Employers can also offer other retirement savings programs such as group registered retirement savings plansand deferred profit sharing plans. Registered retirement savings plans and deferred profit sharing plans permitemployees to save for retirement on a tax-sheltered basis. Pursuant to the Income Tax Act, these plans aresubject to specified contribution limits and qualified investment restrictions.EMPLOYEE BENEFITSEvery province and territory provides a health insurance program. Generally, these programs cover hospital andmedical care. Public programs are funded by general tax revenues and, in some provinces, premiums or payrolltaxes. The employment insurance and workers compensation programs are described in the Employment Lawsection of this guide. Employee benefits provided by employers evolved largely to supplement the basicprotection offered by government programs.They include a wide range of survivor protection, disability income protection and medical, drug and dentalcoverage. Employee benefit plans are often complex, in order to manage the financial and other risks of thesebenefits and to ensure tax-effectiveness.Retirement Plans, Employee Benefits and Equity-Based Incentive and Savings Plans 65