Publisher s Note 2018 Release 3 Previous release was

Transcription

1 Publisher s Note 2018 Release 3 Previous release was From Your Library: Ian J.F. McSweeney and Louise J.A. Greig Pension Benefits Law in Ontario Pension Benefits Law in Ontario is an indispensable resource to the understanding and practice of pension law. It provides a comprehensive annotation and analysis of the Ontario Pension Benefits Act and related Regulations. Copies of forms, reciprocal agreements and the Bulletins, Guidelines and Policies are also included. The case law reviewed includes the decisions of the Financial Services Tribunal, plus reported and unreported cases of the trial and appellate courts of Canada. Each provision sets forth a list of terms defined in the Act and Regulations, and the definition sections are cross-referenced with the applicable provisions. Below is a summary of changes made or proposed to the Pension Benefits Act (Ontario) ( PBA ), Regulation 909 (General) (the Regulations ) and other regulations made under the PBA, material initiatives of the Ontario government and Financial Services Commission of Ontario ( FSCO ), and material cases affecting the PBA for the period from May 1, 2018, to July 31, 2018, as well as cases affecting pension minimum standards legislation in other Canadian jurisdictions that we think are relevant to the PBA: THOMSON REUTERS CANADA Customer Support (Toronto International) (Toll Free Canada U.S.) Fax (Toronto) Fax (Toll Free Canada Only) CustomerSupport.LegalTaxCanada@TR.com This publisher s note may be scanned electronically and photocopied for the purpose of circulating copies within your organization.

2 Changes to the PBA and Regulations. Regulation 249/18 O. Reg. 249/18 was filed on April 20, 2018 and came into force on July 1, It amends Regulation 311/15, conversions and transfers of assets under section 80.4 and conversions under section Regulation 250/18 O. Reg. 250/18 was filed on April 20, 2018 and most provisions came into force on May 1, It amends Regulation 909 and sets out the new funding framework for defined benefit single employer pension plans. These provisions fundamentally change the solvency funding rules. They also change the going concern funding rules and add requirements regarding provisions for adverse deviation (PfAD).. Regulation 251/18 O. Reg. 251/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 196/11, Resolute FP Canada Inc. pension plans.. Regulation 252/18 O. Reg. 252/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 909 by adding a new section 47.9 (relating to General Motors Pension Plan).. Regulation 253/18 O. Reg. 253/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 310/13, asset transfers under sections 80 and 81 of the PBA.. Regulation 254/18 O. Reg. 254/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 202/02, Essar Steel Algoma Inc. pension plans.. Regulation 255/18 O. Reg. 255/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 311/15, conversions and transfers of assets under section 80.4 and conversions under section of the PBA.. Regulation 256/18 O. Reg. 256/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 255/17 and relates to U.S. Steel Canada Inc. pension plans. 2

3 . Regulation 257/18 O. Reg. 257/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 178/11, solvency funding relief for certain public sector pension plans.. Regulation 258/18 O. Reg. 258/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 156/13 and relates to the General Synod Pension Plan of the Anglican Church of Canada.. Regulation 259/18 O. Reg. 259/18 was filed on April 20, 2018 and came into force on May 1, It amends Regulation 156/13 and relates to the General Synod Pension Plan of the Anglican Church of Canada.. Bill 31 Plan for Care and Opportunities Act (Budget Measures), 2018 Bill 31 received third reading and Royal Assent on May 8, Schedule 23 relates to amendments to the PBA. The following are notable changes:. Terminology changes: certain references to the Superintendent of Financial Services under the Financial Services Commission of Ontario Act, 1997 have been change to Chief Executive Officer appointed under the Financial Services Regulatory Authority of Ontario Act, Some references to FSCO were also changed to the Financial Services Regulatory Authority of Ontario... Pension Benefits Guarantee Fund:... subsection 84(1) of the PBA was amended to remove requirements regarding age and years of employment or membership that members and former members must meet, if the date of the wind up is on or after May 19, 2017;... section 85 was amended to provide that the maximum guaranteed benefit under the PBGF is $1500, instead of $1000, if the date of the wind up is on or after May 19, 2017;... new section requires the Minister to periodically conduct a review of the PBGF provisions in the PBA and its regulations... Disclosable events: a new section 98.1, not yet in force, requires prescribed persons to notify the Superintendent of a disclosable event as soon as reasonably practicable; a disclosable event is a prescribed event in relation to an employer of a pension plan. 3

4 FSCO Policies and Forms. Additional FAQs - SEPP to JSPPs On July 3, 2018, FSCO published several new questions and answers related to the conversion of Single Employer Pension Plans (SEPPs) to Jointly Sponsored Pension Plans (JSPPs). The FAQs are available at the following link: Additional FAQs - SEPP to JSPPs. FAQs - Biennial Statements Required for Former and Retired Members On July 3, 2018, FSCO published several new questions and answers related to the statements required for former and retired members, in particular with respect to the processes required for missing members and the waiver under subsection 27(3) of the PBA. Other Noteworthy Items. Quarterly Update on Estimated Solvency Funded Status of Defined Benefit Plans in Ontario On May 7, 2018, FSCO published its quarterly update on the funding of defined benefit (DB) pension plans that provides funding, investment and actuarial information on DB plans registered in Ontario. As at June 30, 2018, the median solvency ratio is 97% (compared to 95% as at March 31, 2018); 49.0% of plans had a solvency ratio between 85% and 100%; and 39.2% of plans had a solvency ratio greater than 100%.. Consultation on Proposed Regulations for Variable Benefits On March 20, 2018, the Ontario government released a consultation document that provides details of proposed regulations, which are required to proclaim the variable benefits provisions in the PBA into force. The variable benefits provisions in the PBA would permit a pension plan that provides DC benefits to offer payments directly from the plan through the establishment of a variable benefit account. Comments were to have been submitted to the Ministry of Finance by May 4,

5 Case Law. Unite Here Local 75 v. Sunnybrook Health Sciences Centre (2018), 2018 ONSC 1444, 2018 CarswellOnt 6304, 39 C.C.P.B. (2nd) 28 (Ont. S.C.J.) - sections referenced: 19, 22, 87, 88, 89 The applicant trade union represented certain members of the Healthcare of Ontario Pension Plan (HOOPP) and sought a declaration that certain additional earnings of the Applicants are pensionable earnings for the purpose of calculating contributions to the HOOPP plan. The respondent employer raised whether the issue of what constitutes pensionable earnings under HOOPP was an issue for the court to decide. The Court reviewed the legislative scheme in the PBA, in particular the duties of the administrator (section 19), the standard of care the administrator is held to (section 22), the role of the Superintendent of Financial Services and of the Financial Services Tribunal (sections 87, 88 and 89), and the ability of a party appearing before the Tribunal to appeal to the Divisional Court. Having reviewed these provisions of the PBA and case law, the Court concluded that it was without jurisdiction consider the application being made. Further, the Court found that if it was wrong in its finding that the court is without jurisdiction, he would exercise his discretion to and decline jurisdiction. The Court further concluded that a letter from a pension officer at FSCO that stated that the plan administrator was not in contravention of the plan terms was not evidence that FSCO had declined jurisdiction, as the letter from the pension office does not engage the process outlined in the legislation and that there was no suggestion the Superintendent was involved or had made or refused to make an order.. Denluck v. The Board of Trustees for the Boilermakers Lodge 359 Pension Plan (2018), 2018 BCSC 1109, 2018 CarswellBC 1743, 40 C.C.P.B. (2nd) 246, 2018 C.E.B. P.G.R (headnote only) (B.C. S.C.) - relevant to section 22 This was an application to certify a class action on behalf of pension plan members who had received less than 100% of the commuted value (CV) of their pension benefit because of the funded status of the plan at the time of the commutation, but who had been told they would receive the balance of their CV when the funded status of the plan improved, or within 5 years, whichever came first. The pension plan is a negotiated-cost, multi-employer pension plan where the trustees cannot increase employers contributions if the plan is underfunded. In 2014, the trustees amended the pension plan to, among other things, cancel the deferred payments that would otherwise have been payable to certain former members who had commuted their benefits. The proposed class include the applicant, Mr. Denluck, and other individuals who are no longer members of the pension plan who were subsequently advised by the trustees of the pension plan that they would not receive a deferred payment of the balance of the CV formerly promised to them. 5

6 The Court considered the various requirements for certification of a class action, including that the pleadings disclose a cause of action. The causes of action plead by Mr. Denluck included a breach of trust by the trustees in cancelling the deferred payment. The Court considered the parties positions and concluded that it was not plain and obvious that the breach of trust cause of action would fail. The Court concluded that the other requirements to certify a class proceeding had been satisfied.. Lubianesky v. Gazdag (2018), 2018 ABQB 290, 2018 CarswellAlta 758, 423 D.L.R. (4th) 751 (Alta. Q.B.) - relevant to section 67.2(6), section 67.3 and 67.4 This was an application for a declaration that section 78(a) of the Alberta Employment Pension Plans Act, which allows married spouses, but not unmarried spouses, the ability to divide their pensions by agreement, contravenes subsection 15(1) of the Charter of Rights and Freedoms. The Court reviewed the jurisprudence related to section 15 and concluded that the impact of the legislation is discriminatory, because it does not allow unmarried spouses to structure their affairs as they see fit. As the Court was not provided any justification for the infringement under section 1 of the Charter, the Court declared that section 78 be read to apply to non-married spouses also. Sections 67.3 and 67.4 allow non-married spouses to transfer or divide pension assets; however, if spouses are unmarried, only the plan member (and not the nonmember spouse) can apply to a pension administrator for a family law valuation (a step required prior to a transfer or division of a pension asset), pursuant to subsection 67.2(6).. Association des employés cadres de la Ville de Terrebonne inc. c. Legris (2018), 2018 QCCS 2752, 2018 CarswellQue 5392, EYB (C.S. Que.) - relevant to the definition of escalated adjustment in the Regulation 909 The Association of Management Employees of the City of Terrebonne Inc. (the CEDA ) sought a declaratory judgment as to whether employees are entitled to ad hoc or automatic indexation of their pension according per the terms of their pension plan. CEDA, and certain retired executives, argued that the indexation is automatic. The City of Terrebonne (the City ) argued that it is ad hoc, since it can only be granted if the financial situation of the pension plan allows it, unless the City decides otherwise. The indexation formula in the plan text indicated that indexation was conditional, subject to the actuarial valuation attesting to their being sufficient funds available, but also required the actuary to include a recommendation regarding the additional contribution required in order to ensure sufficient funds are available to pay indexation. The Court looked to the parties intentions, the history of indexation having been paid in the past where the funds were insufficient, and employee communications. A determination was made the indexation was in fact ad hoc. 6