The 50% Rule for Defined Benefit Plans - Section 21 of the PBSA

Section 21 of the PBSA sets out minimum pension benefits for contributory defined benefit pension plans including what is referred to as the 50% rule (for service after December 31, 1986). This rule requires that if a member’s post 1986 contributions exceed 50% of the member’s pension benefit credit for that period of service, the member’s pension benefit shall be increased by the amount that can be provided by that excess.

OSFI continues to receive questions on when this 50% rule must be applied. The additional benefit resulting from the application of the 50% rule is calculated only once and added to the member's pension benefit as of the date of the event (cessation of membership, death, plan termination or retirement) leading to the benefit determination. The benefit attributable to the 50% rule then becomes part of the pension benefit on which any calculation of a pension benefit credit is based.