Manitoba Labour and Immigration
Employment Termination
Revised January 2002
The main objective of the Pension Benefits Act is to safeguard employees' rights to benefits promised under private pension plans. Over the years, the rights of employees to obtain information have increased. There is now more protection for the spouse or common-law partner of a contributing member. In addition, employees who leave their jobs now have new options regarding transfers of their pension credits.
What is vesting?
Vesting refers to your right to employer contributions made on your behalf.
As of January 1, 1990, the minimum period of employment after which the employee is vested is two years. This means that after two years of service, the employers' contributions will be included when calculating the value of the employee's pension benefit.
The two year vesting period is stated as the legislative minimum. The pension plan may provide for vesting sooner than two years.
Any employee who terminates employment and is entitled to a locked-in pension benefit (which means the benefit is not available as a cash refund) must be permitted to transfer the value of accumulated benefits to;
- another pension plan if the plan so permits or,
- a "Locked-in Retirement Account" with benefits payable upon retirement.
The employee may also choose to keep their pension benefits in the pension fund itself, payable upon retirement in the form of a pension.
How will I know what my entitlements are?
Within 60 days after you notify your employer of your termination, you must be provided with a statement clearly outlining the various entitlements and options available to you.
What is a Locked-In Retirement Account (LIRA)?
The LIRA is an investment vehicle that allows your money (pension benefits) to continue to grow and accumulate interest while being held (locked-in) until retirement. The LIRA replaces the locked-in RRSP, although it operates in the same way. The Manitoba Pension Commission maintains a list of financial institutions permitted to sell LIRAs (see LIRA Brochure for more information).
How will these options benefit me?
- If you choose to transfer your benefits to a LIRA, your money will continue to grow and accumulate interest.
- If you transfer your benefits to a new company pension plan you can build on that plan.
- Lastly, if you choose to leave the value in the present fund, you will still have the pension payable upon retirement.
The choice is yours.
How long do I have to decide where my pension credits will go?
Once you have received your termination statement, you have 90 days to elect transfer of the value as described. An employer may extend the time period if so desired.
What happens if I am eligible for a cash refund?
Plan members who terminate employment and who are eligible for a cash refund must receive payment within 90 days after the later date of:
- the employee's termination date or,
- completion and filing of all documents required to authorize the refund.
