Part VII: Pension and Insurance

21.1

The benefits and terms and conditions of the benefit entitlement for group life, living benefit and spousal life insurance for employees are as described in: the Collective Agreement; the brochure entitled "Group Life Insurance, Living Benefit and Spousal Life Insurance, updated May 31, 2000". These documents, by reference, form part of the Collective Agreement. The benefits and terms and conditions of benefit entitlement as described in the above documents can be changed by mutual consent only.

21.1.1

The employee will be required to submit evidence of insurability if a re-election results in total increased insurance coverage.

21.1.2

Any re-election shall become effective on the January 1st following the year in which the re-election is made or on the date of approval by the insurer of any required evidence of insurability, whichever is later.

21.2

Life Insurance Options

Option	Basic term Insurance¹	Additional Term Insurance²
I	Two Times Base Salary	Nil
II	Two Times Base Salary	One Times Base Salary

1 Basic term Insurance is composed of term insurance equal to base annual earnings raised to the next $500.00 and multiplied by 2.

2 Additional Term Insurance is the optional term insurance which an employee may elect in addition to the basic insurance coverage. It is equal to base annual earnings raised up to the next $1,000.00.

21.3

An employee is eligible to purchase additional term life insurance in blocks of $10,000 to a maximum of $150,000 at no cost to the employer. Effective April 1, 2008, the Employer will no longer subsidize the cost of optional life insurance.

21.4

An employee who meets the following criteria shall be eligible to cash out 50% of his/her total claim value to a maximum of $50,000.

Criteria:

the illness must be terminal with death likely to occur within 24 months;
Hydro One's consent is required;
the consent of the employee;
the beneficiary must have reached the age of majority; and
the employee must be competent and able to understand a transaction of this nature.

Payments must be processed as a loan and interest charged to avoid making the payment a taxable benefit to the employee.

When death occurs, the advance payment plus accrued interest is deducted from the claim value.

21.5

Spousal Insurance

21.5.1

Only spouses of active employees are eligible.

21.5.2

Insurance is available in units of $10,000 to a maximum of $150,000 (or 15 units).

21.5.3

The entire cost, including administration costs, will be paid by the employee.

21.5.4

The participation rate will have to be 20-30% otherwise proof of insurability will be required.

21.5.5

The premium rate will be different from the rate for employees, and will be experience rated. The premiums would then vary from year to year based on the experience of the previous year.

21.6

Dependent Insurance

21.6.1

Effective March 1, 2002 employees may purchase life insurance for their eligible dependents in the amounts of either $10,000 or $25,000 as detailed by the Insurance Carrier and at no cost to the employer.

PENSION PLAN

The Hydro One Pension Plan (Registration #1059104) constitutes the present Pension Plan and forms part of this collective agreement. The provisions of the Pension Plan are generally described in the brochure "A Guide to your Hydro One Pension Plan" (June 23, 2002).

Changes to the Pension Plan affecting Society-represented members of the plan, other than legislative changes, shall be made only upon mutual consent. It is agreed that normal administrative matters such as changing financial advisors are not considered to be changes to the Pension Plan, subject to any understanding, agreement or decision to the contrary with the PWU.

22.1

The employer shall not request legislation, regulations, or Order-in-Council approval or make rules which would change pension benefits, unless upon mutual consent. Moreover, the employer shall not seek legislation to change access to surplus unless upon mutual consent.

22.2

Any changes to actuarial assumptions used for the purpose of filing a funding valuation shall be discussed with the Society prior to filing. The Society reserves the right to challenge the actuarial assumptions used for such filing.

22.3

Buy-Back of Hydro One and External Service

The following shall apply after the Pension Plan Rules are changed:

Employees will be able to purchase the following service on an actuarial basis at no cost to Hydro One, provided the employee provides evidence of such service satisfactory to Hydro One:

summer and co-op students ;

ii)

casual construction;

iii)

temporary employees;

iv)

leaves of absences;

pregnancy/parental leaves;

vi)

broken service;

vii)

external service (see (b) below)

(iv), (v) and (vi) above are enhancements to current provisions.

This provision will be subject to restrictions of the Income Tax Act (Canada) and all applicable provincial or federal pension legislation. (For example, external service prior to 1992 can only be purchased if there was a reciprocal agreement with the former Employer in existence at the time and still exists.)

For the purposes of this section, "service" shall mean service with Ontario Hydro prior to April 1, 1999 or service with Ontario Hydro's successors after April 1, 1999.

22.4

Retirement Bonus

Employees who have completed 10 years or more of continuous employment shall be given, upon retirement, a cash bonus equal to one month's pay. The retirement bonus may be paid in cash or by transfer to an employee's Registered Retirement Savings Plan (RRSP) , at the employee's option.

22.5

Pension Committee

The parties agree to establish a committee to:

provide a forum for the discussion of Society issues and concerns related to the operations of the pension administration unit;
provide a forum for the discussion of contractual obligations (e.g. the introduction of new amendments to the plan, discussion of actuarial assumptions used for funding valuations);
provide the Society with information on pension related issues that may be of assistance in educating their members;
provide a forum to review valuations filed with FSCO or valuations to be used to trigger increased employee contributions and annual pension plan financial statements that have been approved by Hydro One.

In order to fulfill its purpose, the committee members and resource persons will have access to reasonable pension plan and pension fund information, subject to the understanding that certain confidential information will not be available, and any confidential information that is supplied will be maintained in strict confidence by the committee/resource persons.

The Committee will be comprised of two Society representatives and two Employer representatives. Each party shall have the right to have a reasonable number of resource persons attend the meeting. The Committee shall meet twice per year.

22.6

Society members of the Hydro One Pension Plan, whose pension income as a pensioner will exceed the limits prescribed by the Income Tax Act (ITA) for pension paid from a registered pension plan, are eligible for the Supplementary Payment Schedule (SPS). The SPS tops up the amount one receives from the Hydro One Pension Plan to the amount one would receive if there were no ITA limits.

22.7

Hydro One shall exercise reasonable efforts to establish reciprocal transfer agreements with its successor companies or companies with whom it forms partnerships or joint ventures.

22.8

Plan Formula

(This Section does not apply to regular employees hired on or after November 17, 2005).

Effective January 1, 2004, the CPP integration adjustment factor shall be reduced from .625% to .500%. Employees' contributions shall increase by .5% if and when the assets fall below 106% of the liabilities based upon a solvency valuation and shall continue until the assets are at or above 106% based upon a solvency valuation, and shall thereafter be in place or not based upon whether the assets are below, or at or above, 106% of the liabilities based upon a solvency valuation.

Clarity Note #1:

Hydro One may trigger the provision for increasing employee contributions as described above ("provision") by filing a valuation with the Financial Services Commission of Ontario (FSCO). Where it does so, it is not required to exceed the frequency of filing required by law. Hydro One is not obligated to trigger the provision by a FSCO filing only, and, instead, may do so by an internal valuation. Where Hydro One elects to proceed by an internal valuation, it must do so annually and must share any valuation with the Society for comment if it is relying upon the valuation to cause employee contributions to change. If the Society believes the valuation to be in material error and Hydro One disagrees, the Society may cause a review of the valuation by an independent actuary whose opinion on that complaint shall be final and binding. The independent actuary mutually selected by the parties, or if in disagreement, appointed by a rights arbitrator under the collective agreement, may conduct his/her review in any manner he/she considers appropriate of his/her sole discretion. Hydro One shall pay the actuary's fees and disbursements. However, if the independent actuary concludes, in his/her sole discretion, that the Society's objections were unreasonable, the actuary may direct the Society to reimburse Hydro One for all or a portion of the fees and disbursements invoiced by the actuary.

Clarity Note #2:

The change in the CPP integration factor will apply to all of the established service of a Society-represented member who retires after the effective date provided that some portion of such Society-represented established service occurred after the effective date of the change in the CPP integration factor.

22.9

Pension Plan Provisions for Regular Employees hired on or after November 17, 2005

The following provisions apply to regular employees hired on or after November 17, 2005:

Benefit	Provision
Benefit Formula	2% per year to maximum of 35 years
Final Average Earnings	Highest 60 consecutive months
Bridge Benefit	None
Integrated with CPP	Yes (CPP integration adjustment factor = 0.625%)
Indexing	"75% of Ontario CPI (maximum of 5%, no carryover)"
Employee Contributions	4%/6%
Normal Retirement	Age 65
Early Unreduced Retirement	"Rule of 85, based on Established Service."
Early Reduced Retirement	Age 55
Survivor Benefit	66.67%
Membership Eligibility	1st of month following 3 months of continuous service. No buy back of these three months.
Vesting	1 year
Post Retirement Benefit Eligibility	2 years of pension plan membership and 10 years continuous service with Hydro One

Regular employees hired on or after November 17, 2005 may opt not to enroll in the pension plan. They may elect an additional 3.5% of base earnings in lieu of pension plan participation.

All provisions of the Pension Plan and this Article apply to regular employees hired on or after November 17, 2005 except Section 22.8 ("Plan Formula") and as otherwise specified in this Section.

The Committee will be comprised of two Society representatives and two Employer representatives. Each party shall have the right to have a reasonable number of resource persons attend the meeting. The Committee shall meet twice per year.