|
|
.................... ...........
◊Home
◊About
Us
◊Issues
◦FSCO ◊SERP
◊Membership
◊Financial
Data
◊Indexation
◊About
the Website |
IssuesPartial Wind up
The plan is currently in the middle of a partial wind up related to those members who lost their jobs as a result of the buy out by Great West Life. Generally, this includes everyone who left the employ between July 10, 2003 and June 30, 2005 plus a few others whose termination was delayed. It is now important that the ownership of the surplus be decided. To this end a class action law suit has been commenced and details are available from the class action page. If you are in any doubt as to your status as a member of the partial wind-up group, you should check with the company.
Some members of the partial wind-up group may qualify for grow-in rights. You can learn more about grow-in rights from CLPENS Newsletter 19, or from the FSCO document, Your Pension Rights (pdf - 495 KB).
The regulations of the Ontario Pensions Benefits Act require that any surplus be distributed subject to the provisions of the Pensions Benefit Act and the Income Tax Act. According to the Act, if a surplus exists upon full or partial wind-up of a pension plan
The wind up report was initially due on Dec. 31, 2005, but the company was granted an extension by FSCO to March 31, 2006.
Correspondence pertaining to the request for extension is available for viewing here:
Partial Wind-up Report SummaryThe partial wind-up report was filed on March 31st 2006. A summary of this report is now available at http://www.clpens.com/PWUSummary.htm.
Surplus OwnershipThe Canada Life Trusteed Pension Plan provides a “defined benefit” pension. Surplus is created when the assets of a pension plan exceed the present value of benefits. The issue is: Who has rights to the surplus if the plan is amended or discontinued or wound down (if, for example the Employer sells its business or goes into liquidation).
Members' rights under the Trust are spelled out in the Trust Deed. If this includes a right to the surplus, then the surplus belongs to the fund and its beneficiaries and is available to improve benefits or otherwise be shared among the plan members and beneficiaries.
Major litigation has emerged in recent years over “ownership” of the surplus, as noted below. Decisions handed down by the Supreme Court of Canada have decided strongly in favour of the trust beneficiaries, unless a Trusteed Plan provided for the Employer to be able to revoke the trust and bring the surplus back to itself. The Canada Life Trusteed Plan surplus provisions have meandered over the years. In 1988, it was confirmed that no plan assets would be returned to the company, but in 1997 the Company attempted a unilateral amendment claiming the balance of surplus after benefits were secured, and is now proceeding on the basis that it has “a clear right to the surplus”.
The control of the Pension Plan and its surplus is now in the hands of Great West Life, owned by Power Corporation. The status and future of the plan, along with the issue of surplus ownership is now of even greater concern to the Canada Life pension plan members.
The pension fund is a separate entity, and does not belong to Canada Life. However, the company does have certain rights with respect to the plan. A new owner has no greater rights to the fund or the surplus than Canada Life had. Nonetheless, we would be wise to be vigilant. It is to be expected that the intentions of the new owner will be quite different from those we are accustomed to with Canada Life.
Financial statements must be provided by the company on request, as one of your rights under the Pension Benefits Act. The Financial Statements of the Employee Pension Plan do not indicate the amount of the Plan Surplus, nor can the amount be determined from The Canada Life Annual Report. An actuarial valuation of the plan is completed every 3 years and is used to report to the Pension Commission for the next 3-year period. This document is also available upon request and the amount of surplus can be calculated from it. However, by the time the information is available it is about 12 months out of date.
The latest estimate we have for the surplus is $276 million as of Dec. 31,2004. Excerpts from the Financial Statements are included in Financial Data.
Expenses Charged to the Employee Pension PlanIn 1994, Canada Life began charging the Employee Pension Plan for the cost of administration of the Plan. The amounts charged for several years are shown in the following table.
When asked whether the level of these fees is the same as, or less than, the fees charged to other similar pension plans under administration, the answer was
Partly because such answers are unsatisfactory and also because it is felt that taking those fees has illegally reduced the plan surplus, collection of such charges is being challenged as part of the law suit mentioned above. The Company has agreed to the FSCO request that, until this matter is settled, no more company expenses will be charged to the fund.
Page Last Revised 07 Dec 2009 |
|
|