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Pensions & Benefits Law

A Discussion of Canadian and U.S./Cross-Border Pension & Benefit Legal Issues

Suing to Recover Benefit Overpayments? It May Not Be So Easy

Posted in U.S. Fiduciaries, U.S. Pensions & Benefits Law

Can plan fiduciaries sue to recover overpayments made many years ago? As plan audits have uncovered more and more payment errors, many plans have acted as if no time limits or other restrictions applied to their repayment demands. However, a recent decision involving a Pfizer pension plan illustrates that even though the case law has recognized a fiduciary’s right to recover overpayments, lawsuits against retirees who don’t respond to demands for repayment may face some obstacles.

The retiree in this case had elected to receive her pension over a three year period ending in 2005. However, her monthly payments kept coming, and when she and her financial adviser called Fidelity, which was responsible for pension check disbursement, they were told that she had taken out an annuity that would continue for life. It was not until 2009 that Pfizer found the mistake and cut off future monthly payments. The plan and Pfizer did not commence the suit to recover over $1.3 million in overpayments until 2014. Continue Reading

New Requirements Will Facilitate Pension Plan Advisory Committees: What You Need To Know

Posted in Canada Pensions & Benefits Law, Pension Reform, Plan Administration

Many plan administrators will soon have to meet a number of new requirements aimed at facilitating the formation and operation of pension plan advisory committees.


The Ontario Pension Benefits Act (PBA) has for some time provided for the formation of advisory committees by pension plan members.  Members and retired members can, by majority vote, establish an advisory committee.  The PBA provides that the purposes of such a committee are to monitor the administration of the plan, make recommendations to the administrator regarding the plan administration, and to promote “awareness and understanding” of the plan among the membership.

Such committees have rarely been established, however, perhaps due to the fact that the members are not entitled to any assistance from the administrator in organizing the vote, nor are they entitled to any reimbursement from the pension fund or from the administrator for any costs incurred in operating the committee.  This is all about to change.  Continue Reading

Planning To Annuitize Current Retirees? Fifth Circuit Unambiguously Upholds Verizon’s Right To De-Risk

Posted in De-Risking, U.S. Pensions & Benefits Law

Sometimes you appreciate confirmation that actions – you always thought were permissible – continue to be viable options.  We have just received confirmation from the U.S. Court of Appeals for the Fifth Circuit that the long-standing practice of de-risking by purchasing annuities from insurance companies remains permissible.

In 2012, Verizon decided to annuitize the benefits of current retirees by purchasing annuities from Prudential.  A group of those retirees attempted  to stop the transaction from going forward, and when that failed, proceeded to attempt to undo the transaction on the grounds that it involved fiduciary breaches and violated various provisions of ERISA.

The plaintiffs lost repeatedly at the district court level, which ruled that they had no causes of action, but they kept coming back.  Remaining participants in the plans were even added as another potential class of plaintiffs to challenge the impact of the purchase on the ongoing plan.  Readers of this blog know that I have predicted that the plaintiffs would likely lose because their claims were inconsistent with existing interpretations of ERISA.  In an unpublished opinion, the U.S. Court of Appeals for the Fifth Circuit  agreed, upholding the district court’s dismissal of all of the claims of both groups of plaintiffs after de novo review. Continue Reading

No More Determination Letters? What are Plan Sponsors to Do?

Posted in U.S. Pensions & Benefits Law

Would you bet millions of dollars on your ability to accurately predict how the IRS will interpret the tax code? That’s what a plan sponsor that adopts a plan that isn’t approved by the IRS does. Even though they are not legally required to obtain determination letters,  virtually all plan sponsors with their own plan documents apply regularly for favorable determination letters approving their plan language.

The Internal Revenue Service has just announced that it is not only discontinuing its requirement that individually-designed plans seeking approval be reviewed for new determination letters every five years, but it will no longer review these plans except on adoption and termination.  The excuse given is lack of manpower and resources, but the decision leaves adopters of individually-designed plans in a quandary.

How are they to make sure that their plans are in compliance, given the seemingly ever-changing statutory and regulatory requirements and the serious consequences, up to retroactive disqualification, for failure to do it right?   Continue Reading

Target Benefit Plans Go West

Posted in Canada Pensions & Benefits Law, De-Risking, Innovation & Plan Design, Target Benefit Plans

When British Columbia’s Pension Benefits Standards Act comes into force on September 30, 2015, employers that sponsor plans in British Columbia will have more plan design options available to them. Following New Brunswick and Alberta, both of which currently have comprehensive target benefit regimes in place, British Columbia’s pension laws will soon include provisions for target benefits plans (TBPs). Continue Reading

Is the Pension De-Risking Window Closing? New IRS Guidance Limits Plan Sponsor Options

Posted in De-Risking, U.S. Pensions & Benefits Law

Score one for the opponents of de-risking.  The U.S. Internal Revenue Service has just announced that it will be amending its regulations on required minimum distributions to prohibit offering lump sum windows to retirees in pay status.  This is a 180 degree about face for the IRS, which previously issued private letter rulings to large sponsors, including Ford and General Motors, permitting these lump sum cash outs.

This new approach follows a report from the General Accounting Office that found a sample of de-risking disclosures provided to participants to be deficient, as well as pressure from groups such as AARP to curb de-risking practices.  The AARP has argued that de-risking practices cause retirees to lose PBGC insurance protection, singling out cash outs that require retirees to manage their own investments. Continue Reading

Solvency Reserve Accounts (Part III) – “Oh and One More Thing…Payment of Benefits and Expenses”

Posted in Canada Pensions & Benefits Law, DB Plan Funding

In our previous two articles in this series (Part I and Part II), we considered issues related to setting up an Alberta (and eventually BC) defined benefit plan solvency reserve account (SRA) and sponsor verses administrator roles in establishing, and making withdrawals from, an SRA.  In this post, we examine the issue of benefit and plan administration expense payments from an SRA.

You will recall that to eliminate any possibility of existing plan trust wording restricting the intended operation of the SRA, the recommended approach is to establish the SRA through a separate plan trust agreement supported by appropriate plan amendments.  This would result in the pension plan being funded through two or more trusts.  So far so good, as there is no legislative restrictions on plans having multiple trust funds.  Continue Reading

Quebec Proposes Pension Funding Reform for Private Sector Plans

Posted in Canada Pensions & Benefits Law, DB Plan Funding, Legislation & Regulations, Pension Reform, Surplus

Following the release of the D’Amours Report in 2013, which provided recommendations on how to improve  Quebec’s retirement income system, the Quebec government was widely expected to  reform the funding of Quebec registered private-sector pension plans.

After nearly two years of consultation with various stakeholders (and a change in government), the Quebec government introduced Bill 57 in the National Assembly (An Act to amend the Supplemental Pension Plans Act mainly with respect to the funding of defined benefit pension plans), which includes the following amendments to the SPPA:

Solvency Funding:  The most significant change in Bill 57 is the proposed elimination of the requirement to fund a plan on a solvency basis. The solvency of a plan would, however, still have to be determined and used for certain purposes (e.g., limits on the use of surplus while the plan is ongoing and on transfers of commuted values out of the plan). Continue Reading

Upcoming Osler Webinar Provides In-Depth Look at Plan Investments

Posted in Canada Pensions & Benefits Law, Investments

In this engaging webinar, “An In-Depth Look at Plan Investments: Recent and Upcoming Changes to Legislation and Policy”, our panel of pension investment experts will discuss recent and upcoming investment regulatory amendments, policies and initiatives. The panel, which includes Tony Devir, Anna Zalewski, Julien Ranger and Lori Stein, will examine the impact and implications of investment-related legislative and policy changes for plan administrators and other key players. You will come away from this webinar with a practical list of top 2015 Investments To-Dos.

To register for the webinar,  please select the date that works best for you – June 16 or 25 – by clicking here or contact Lindsay Taylor seminars@osler.com for further information.

The Dutiful Fiduciary: What’s Really Important About the Supreme Court’s Tibble Decision

Posted in U.S. Fiduciaries, U.S. Pensions & Benefits Law

Are there time limits on a participant’s ability to challenge imprudent 401(k) investment fund offerings?  Can participants challenge an investment fund selected ten or even twenty years ago? If so, will fiduciaries be subject to potential liability for losses going back decades?

The U.S. Supreme Court has just released its long-awaited decision in Tibble v Edison, holding that participants are not prevented from challenging a plan fiduciary’s imprudent 401(k) investment choices if the investment was selected more than six years ago. This means that there is not a one-time six year window for challenging imprudent investment offerings. Continue Reading