Canada Life Canadian Pension Plan Members’ Rights Group
Newsletter 13- May 17, 2004
MEMBERSHIP DRIVE
There are now well over 250 members of the Members’ Rights Group. The target is to increase our size to over 1000 by the end of the year. The numbers have tended to increase following the release of a new newsletter. Please forward newsletter 13 to anyone you might think is interested including retirees, active and terminated members, agents and previous Canadian Pension Plan members in the US and/or UK.
We must hang together or end up hanging together.
PENSION PLAN SURPLUS
Great West has not yet filed the 2003 Financial Statements with FSCO. Based on our best guestimate we think the plan surplus at the end of 2003 will be in excess of $260,000,000. It is also our position that these funds are for the benefit of the Canadian Pension Plan members.
MONSANTO CASE
The Supreme Court of Canada heard an appeal by Monsanto Canada Inc. in February 2004. Monsanto is appealing the Superintendent of Financial Services’ decision that surplus must be distributed from the pension plan when it is partially wound-up. A more comprehensive explanation of the issues can be viewed on the Osler, Hoskin& Harcourt LLP website osler.com.
The most recent edition of
BENEFITS CANADA has an article on the Monsanto case in which it was reported
that Randy Bauslaugh, a partner with Blake, Cassels and Grayson told attendees
at a Morneau Sobeco Emerging Trends seminar that he believes a decision
will come down in the fall and that it will be in favour of plan members.
He bases this on the fact that the Supreme Court has been leaning toward
upholding all decisions at the divisional level. What this means to those
Canada Life plan members included in the partial plan wind-up is that the
company will need to determine how much surplus is attributable to those
members and then determine how it is to be distributed. Needless to say this
will be closely watched.
FINANCIAL SERVICES COMMISION OF ONTARIO (FSCO)
Representatives of the Members’ Rights Group met with FSCO on March 15,2004. The discussions were informative and useful. FSCO seem to fully understand the Group’s by the end of the meeting and offered to help move the process forward. In order to do so FSCO requested a letter outlining the assistance required.
A letter is being sent outlining 4 areas that needed clarification and their assistance. These areas are outlined below:
Section 24 of the Ontario Pensions Benefits Act makes provision for an Advisory Committee. FSCO has been asked to clarify the requirements in establishing an Advisory Committee and if the Members’ Rights Group decided it was in the best interests of the members, how would the Group proceed?
The original Trust documents contemplated the reversion of the pension plan surplus to the Employer only in the event of Liquidation. This reversion was eliminated in 1988.The Members’ Rights Group has asked FSCO to review all documentation and establish a position on the question of ownership of the surplus.
The original Trust document called for expenses of operating the Pension Plan to be paid by the Employer. The 1993 amendment purported to shift the costs to the Pension Plan. In view of the Markle case (see newsletter 7 dated July 9, 2003 for background) FSCO has been asked for its views on whether the expense money should be returned to the plan. The expenses charged to the plan have amounted to over $30M since 1994. In addition the latest valuation report specifies that the provision for expenses is 0.5%. If this is applied to the actuarial liability of $412M it provides for an annual expense of about $2M. Actual expenses for recent years exceeded this level. FSCO has been asked to clarify this with the company.
FSCO has been asked to assist the Members’ Rights Group in opening the lines of communication with the company.
OTHER STAFF BENEFITS
The primary purpose of the Members’ Rights Group is to monitor the Canada Life Pension Plan. We have also included the retiree health coverage under the mandate at the request of a number of members. There is no legislation restricting companies from amending or terminating retiree coverage, but legal views have been expressed that doctrine of detrimental reliance may prevail. In other words, pensioners relied on the Canada Life coverage when they could have obtained replacement protection while they were younger and eligible for individual personal insurance.
There is an interesting class action lawsuit just filed on behalf of the Ontario Government Retirees. The Government of Ontario amended the retiree program effective June 1,2002 which resulted in reduced benefits to retirees. The position of the retirees is that by doing so it violated the retirees’ equality rights under S. 15 of the Canadian Charter of Rights and Freedoms.
The Ontario Superior Court of Justice certified the class proceeding on January 7, 2004.
We will continue to monitor further developments and update you in future Newsletters.
Wib Antler
Gary Nummelin
Phil Davy
NOTE: Previous newsletters are available on our website. The Group’s website is www.trigger.net/~clpens/. If you have received this newsletter by mistake, or if you wish to be removed from the mailing list, please send an e-mail to clpens@trigger.net with the subject of “Unsubscribe”. If you have information or opinions to share with the group as a whole, send your submission to clpens@trigger.net, and we will post them online, with as little editing as possible