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If you got fired, would you lose your pension?

  • Last Updated:
  • Jun 3rd, 2020 11:41 am
[OP]
Jr. Member
User avatar
Oct 15, 2006
135 posts
16 upvotes
Alberta

If you got fired, would you lose your pension?

We got this reduced salary but I still have to work full hours as I have an urgent project. Now, if I leave I have worked on this project and used 70% of the budget and no job offers available, but if I stay, I told them my salary should be back to full salary by end of June. If they fire me, do I lose my collected 15 years of pension? If I leave, can they ask for compensation for the used 70% of the project?
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11 replies
Sr. Member
Jul 15, 2003
643 posts
170 upvotes
GTA, Ontario
1) You will not lose your collected 15 years of pension.
2) I don't believe so.

When I left my previous company with a defined benefit pension, I was given 3 options:

#1 - Keep the pension there, beginning to receive the benefit at the retirement times (early retirement, normal retirement, late retirement). Obviously the amount will be reduced because I did not work there to earn a full pension.
#2 - Transfer it into an investment account (this had to be a locked-in account once it hit a certain threshold). You can choose where it goes, for example, I moved mine to one of the big banks.
#3 - Transfer to another pension (this was possible due to the employers having similar pensions, I did have to top up though). Example, if you worked 15 years at Company A, it will be worth 15 years at Company B (or worth more or less).
Deal Addict
Jul 12, 2008
2140 posts
449 upvotes
Burlington
Dymis wrote: 1) You will not lose your collected 15 years of pension.
2) I don't believe so.

When I left my previous company with a defined benefit pension, I was given 3 options:

#1 - Keep the pension there, beginning to receive the benefit at the retirement times (early retirement, normal retirement, late retirement). Obviously the amount will be reduced because I did not work there to earn a full pension.
#2 - Transfer it into an investment account (this had to be a locked-in account once it hit a certain threshold). You can choose where it goes, for example, I moved mine to one of the big banks.
#3 - Transfer to another pension (this was possible due to the employers having similar pensions, I did have to top up though). Example, if you worked 15 years at Company A, it will be worth 15 years at Company B (or worth more or less).
This is spot on and you may likely get severance as well of like 1 month for each year of service (which could reach 2 years as some companies will give you your vacation and pension entitlements for those 15 months).
Deal Expert
Aug 22, 2011
32591 posts
18381 upvotes
Ottawa
Best to consult a lawyer.
Sr. Member
Jan 1, 2017
947 posts
738 upvotes
badmus wrote: This is spot on and you may likely get severance as well of like 1 month for each year of service (which could reach 2 years as some companies will give you your vacation and pension entitlements for those 15 months).
What are you talking about? You can’t get severance if you just quit. Now if you didn’t agree to the salary reduction talk to an employment lawyer and in this case this could be considered a constructive dismissal and only then you may be entitled to severance.
Deal Addict
Jul 12, 2008
2140 posts
449 upvotes
Burlington
ProductGuy wrote: What are you talking about? You can’t get severance if you just quit. Now if you didn’t agree to the salary reduction talk to an employment lawyer and in this case this could be considered a constructive dismissal and only then you may be entitled to severance.
In a general situation if you are fired without cause you get severance is what I meant, anything specific should go through a lawyer.
Sr. Member
Jan 1, 2017
947 posts
738 upvotes
badmus wrote: In a general situation if you are fired without cause you get severance is what I meant, anything specific should go through a lawyer.
Yeah, you are right. I read OPs post as her leaving/quitting not being fired.
Deal Fanatic
May 31, 2006
5609 posts
307 upvotes
Toronto
You won't lose it. The company that it's held with will contact you and provide you with your options. When I left my previous employer of 5 years, I was given the option to keep the funds with the investment company but I had to move it to another product line because I could not keep it within the company held fund. The other option was to move the funds to another company which I did.
Member
Oct 24, 2010
368 posts
216 upvotes
Ottawa
For others reading this, whether you get to keep the pension depends on how long you've been with the company.

You always get to keep what you contributed, regardless of tenure. What you contributed is your money. You have a right to keep it.

For the employer contributed portion, it depends on the conditions of the pension and how long before it vests. Once it's vested, you are generally given the options mentioned by @Dymis. I've seen vesting conditions of anywhere from 1 year to 5 years, but OP is certainly fine after 15.
Deal Fanatic
User avatar
Nov 2, 2013
5352 posts
1234 upvotes
Edmonton, AB
Your contributions are your own money, so you're entitled to it, subject to whatever withdrawal terms there may be with that pension fund, or whatever terms the employer put on its contributions on its behalf.

Often employers like to put clauses specifying that they reserve to deduct/keep $X of your remaining earnings (that may be in the form of the employer's pension contributions) if you're terminated before some date. To make it look reasonable, they'll cite that it's to compensate as a training or some other cost of employing you, or a bonus.

e.g. If this Agreement is terminated within X months, however caused, the Employer reserves the right to retain _____ , which represents _____ .
Then whether it is enforceable depends on whether it's reasonable. In extreme cases, you'll have an aggressive Employer who thinks it is justified to take something ridiculous and force you to sue for it.

What happens a lot is employers realize an employee is too expensive, especially having to additionally match pension contributions. Then the employee is terminated for some excuse justifying just cause, and the employer gets sued for a reasonable notice period (i.e. severance) that the employee would otherwise get if not dismissed for just cause. The kicker here is that "notice period" also includes benefits, pension contributions, and the usual other forms of compensation the employee would otherwise get during employment (or their equivalent value).

e.g. Your monthly base salary was $6,000, and the employer was to contribute an additional 5% of that into the RRSP. You were terminated after 2 years. Your employer alleges just cause because you were seen as lazy (often not an actual enforceable reason). Upon learning that there was no actual just cause, it'd have to pay you 4 weeks of reasonable notice, which is the sum of:
Base salary for 4 weeks: $5,538.46
Employer RRSP contributions (5%) for 4 weeks: $276.92
Benefit plan value for 4 weeks ($180/month value): $166.15
Under common law (i.e. evolving law made by court decisions, that you'd have to go to court to have enforced), when there is no actual just cause to fire the employee, the notice period is usually longer than what provincial Employment Standards legislation prescribes, often double, triple, or even more. Usually it is a month per year of service, more or less depending on other factors such as:

- Age (usually older = less employable = more money awarded)
- Education, experience, credentials (i.e. how good your resume is)
- Character of employment (i.e. type of industry/job you were in, particularly level of responsibilities)
- Availability of alternate employment (e.g. how specialized your job was; ability to get another similar one)
- Restrictive covenants (e.g. Non-Competition or Non-Solicitation clauses that make it harder to do business with, or work for another similar employer)
- Bad faith/attacks by your Employer
etc.

Ripe cases worth money are usually those in management or higher-responsibility roles that are much harder to obtain, age nearing retirement, under-educated, have aggressive employment agreements forbidding them from working for affiliates or other businesses similar to the Employer, experienced harassment or discrimination, etc.

In the above example, a court would likely award 2 months instead, increased or decreased due to other factors surrounding and following the employment relationship. It is just in many cases, not actually cost effective to litigate to enforce it.
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Deal Expert
User avatar
Oct 26, 2003
33419 posts
3610 upvotes
Winnipeg
Your pension are a combination of your own contribution and the employer's contribution, so when you leave the company for whatever reason, you will get your pension. The account stays with you.
Newbie
May 15, 2020
87 posts
56 upvotes
Thornhill ON
The money remains yours but as the other posters said you will need to decide if to leave it with that employer for deferred pension, or transfer the lump sum in a locked-in retirement account (LIRA) which you can open with your bank. I moved mine to LIRA as i figured out i may be able to invest the money better than my employer did, and that later proved to be the case. I'd say take a look at the last pension report to examine the portfolio content and performance of the funds, if you can do better than that or take the report to a financial advisor to discuss.

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