Planning to work beyond age 65? Your benefits could be reduced

Since mandatory retirement was abolished in Ontario at the end of 2006, you can choose to work beyond age 65. However, your employer may not have to provide you with the same life, health, dental and disability coverage as your younger co-workers.

Amendments to the Ontario Human Rights Code ended mandatory retirement, but the Code still allows age-based distinctions in employee benefit plans if they comply with the Employment Standards Act (ESA) and its regulations. Because the ESA regs continue to define age as “18 years or more and less than 65 years,” protection under both the Code and the ESA effectively ends at age 65.

In unionized environments, several grievances have been initiated when employers discontinued benefits coverage for employees over age 65. Where contract language said benefits are extended to “all employees,” arbitrators have not permitted employers to restrict benefits for older workers. However, if different benefits for employees over age 65 were expressly contemplated in the collective agreement, benefit reductions have been allowed.

In the Ontario Nurses’ Association vs the Municipality of Chatham-Kent , the arbitrator also ruled that the collective agreement provision eliminating certain benefits at age 65 do not violate the Canadian Charter of Rights and Freedoms or the Ontario Human Rights Code. To date there have been no Charter challenges of benefit reductions by non-union employees.

In late 2010 Canadian Payroll and Employment News surveyed employers to find out whether or not employers modify benefit coverage for employees who work beyond age 65. Sixty-three per cent of respondents said that employee benefits coverage is reduced or modified, but not cancelled; 21 per cent said that benefits stay exactly the same; 12 per cent cancelled coverage.

One survey participant noted, “Our office currently employs three people over 65 and four over 60. The long-term disability portion of the benefits package ends completely at age 65, and the life insurance portion is cut in half. Other benefits continue until age 70, and will likely be modified at that point rather than being cancelled.”

So if you are considering staying in your job beyond your mid 60s, check with your employer to find out how your benefits might change. You will be eligible for the Ontario Drug Benefits Plan, but you may want to investigate private group options for life, health and dental benefits no longer covered at the same level or at all by your employer.

Also see: What about benefits when you retire?  and Health insurance plans for retirees worth the cost .