Pensions are paid for during employment by the employee alone, or supplemented by the employer, or by the employer alone.
Benefits are deferred to the retirement or disability of the employee, and are generally payable thereafter to the person's death.
In many public or private employment-based pension plans, the employer regularly contributes a small percentage of an employee’s earnings to an individual plan account that is set up in the employee’s name. Employee contributions, if any, are also credited to the pension account.
Sometimes, pensions are only payable as of a certain age, such as 55 or 60 or 65, or upon the attainment of a certain length of service, such as 30 years of service.
The government (the state) often provides a gamut of pensions, some to supplement private retirement pensions, others to provide the disabled with an allowance.
In Molleur v MNR, Justice Dumoulin of the Exchequer Court of Canada wrote that: "Pension allowances or stipends presuppose the retirement or cessation of the pensioner's services, as no one draws from the same employer both a salary and superannuation instalments."
He further adopoted these words to define a "pension":
"... an annuity or other periodical payment made, esp., by a government, a company, or an employer of labour, in consideration of past services or of the relinquishment of rights, claims, or emoluments....'
"Pensions are universally construed as a reward for long-continued service paid upon retirement from service, and all pensions of public employees are paid upon their retirement.
"A pension is a stated allowance or stipend made in consideration of past services or of surrender of rights or emoluments to one retired from service, and is not wages as ... wages are defined as remuneration for employment."
In 1990, Justice Wilson of the Supreme Court of Canada remarked, in Clarke v Clarke that "pension is a colloquial term rather than a term of art". But ten years later, that same court, in Boston v Boston, Justice Major for the Court, defined it as follows:
"A pension right arises as an asset or a contingent bundle of rights to a future income stream. After retirement, when the pension produces an income, the pension asset is, in a sense, being liquidated."
The British Columbia Pension Benefits Standards Act (using wording very similar to the Alberta legislation), defines a pension as:
“... a series of payments that continue for the life of a former member, whether or not the pension is afterward continued to another person.”
REFERENCES:
- Pension Benefits Standards Act, Revised Statutes of British Columbia 1996, Chapter 352
- Employment Pension Plans Act, Revised Statutes of Alberta, Chapter E‑8, published at canlii.com/ab/laws/sta/e-8/index.html
- Molleur v Minister of National Revenue 1965 CTC 267
- Clarke v Clarke 1990 2 Supreme Court Reports 795
- Boston v Boston 2001 SCC 43