The Ontario Pension Benefits Act (PBA), as well as other legislation, contains wording governing the treatment of plan surplus on partial wind-up. That wording was recently clarified by the Supreme Court of Canada.
For many years, with the unspoken approval of regulatory authorities, it was generally accepted that the law could be interpreted as giving individuals affected by a partial wind-up entitlement to some portion of the surplus if and when the whole plan is wound up.
This was practice for many years. However, when Monsanto filed for a partial wind-up, the Financial Services Commission of Ontario (FSCO) changed its practice. Monsanto challenged the change all the way to the Supreme Court; however, the Supreme Court ruled in favour of FSCO. As a result, based on the wording of the PBA (and other similar legislation), a plan surplus must be distributed at the point of partial wind-up, not at a future date (provided plan wording creates an entitlement).
Action to date
ACPM sided with Monsanto. Believing that the issue was important and was one of national importance, we became an intervener in the case. We were joined at the Supreme Court of Canada level, by OSFI.
Currently, a task force of ACPM’s Advocacy and Government Relations Committee (AGRC) is examining the implications of the Monsanto decision and has recommended changes to the PBA. In March 2005, the task force sent a letter to the Ontario’s Superintendent of Financial Services, highlighting a list of issues with respect to implementation of the Monsanto decision. This was followed by a meeting with FSCO representatives in May 2005.
In June 2005, the AGRC’s task force sent a letter to Ontario’s Minister of Finance expressing concern about the impact the court’s decision has had on many ACPM members and on workplace pension plans in Canada. This letter included a list of recommended legislative measures.
The task force and the AGRC will continue to advocate for changes to the PBA. It is a very complex matter which will reverberate for years to come.