Teachers fight their pension plan over survivor rules

More than 80 retired Ontario teachers are taking on their pension plan over the way it treats spousal benefits if they get married after retiring.

The group has filed applications with the Ontario Human Rights Tribunal claiming the Ontario Teachers’ Pension Plan Board discriminates based on gender and marital status because teachers who marry after retirement must take a pension reduction in order to purchase a survivor benefit for their spouses.

Currently the Ontario Teachers Pension Plan says that when a member is married at the date of retirement, upon his subsequent death the spouse is automatically entitled to 60 per cent of the monthly benefit received by the member.

In contrast, if a pensioner marries after retirement, he must take a permanent pension reduction in order to pay for a spousal survivor benefit, even if he subsequently outlives the spouse he married. The amount of the deduction varies based on the ages of the plan member and the spouse, but one example in the OTPP’s guidelines reduced the pension by 13%.

Lois Maxim retired single in 2003 after 29 years of teaching and contributing to the pension plan. When she got married in 2008, she was shocked to learn she would have to pay a penalty of hundreds of dollars a month to obtain a survivor’s pension for her husband. “Equal contributions made during a career of teaching deserve equal benefits. I shouldn’t have been denied full benefits for getting married later in life,” she says.

Lawyer Bob Keel represents the applicants who are all members of the Ontario Teachers’ Survivor Benefit Group. He says his clients are seeking relief from the Ontario Human Rights Tribunal because 10 years of letters, phone calls and presentations have been fruitless.

Because most frequently the impact is on women in opposite sex or same sex marriages, the applicants contend that the current survivor benefits discriminate based on marital status and gender

“The Ministry, the Ontario Teachers’ Federation and the OTPP Board view changes to survivor benefit eligibility as ‘a plan enhancement.’” says Keel. “They say an amendment will only be made if there is a plan surplus, which is not anticipated.”

While there are about 125 members of the Ontario Teachers’ Survivor Benefit Group, it is difficult to pinpoint exactly how many spouses of current pensioners who married after retirement might be denied the subsidized benefit. Keel thinks a conservative estimate is that out of 117,000 pensioners at the end of last year, only about 300 people would be impacted.

He points out that the Ontario Municipal Employees Retirement System recognized the human rights issues in 1991 and extended full survivor benefits to spouses of pensioners who marry after retirement without any upfront reduction to the member’s pension. “OMERS also said it was not a big deal from a cost or administrative perspective,” Keele noted.

Similarly, teachers’ plans in New Brunswick, Newfoundland, Quebec, Prince Edward Island and Nova Scotia provide survivor benefits for post-retirement spouses without penalty.

However, many public and private plans do not have a similar subsidized spousal benefit. As a result, the member's pension is reduced at the date of retirement in order to pay for a spousal benefit. When a pensioner marries after retirement, that spouse does not become eligible for any survivor benefit -- whether subsidized or not.

The 80 or more applications will likely be heard together by the Tribunal, but a final disposition could be several years away.

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