Buschau v. Rogers Communications - The Never Ending Saga Favours Employers...For Now
Is it permissible to re-open a closed pension plan and thereby quash the hopes of members to access the surplus bottled up in it? The latest decision in the Rogers v. Buschau saga suggests it is.
As some may remember, the sponsor, Rogers Communications Inc., had closed a defined benefit pension plan, registered under the federal Pension Benefits Standards Act (PBSA), to future employees, and attempted to withdraw surplus from the plan. After a series of appeals, Rogers repaid the surplus into the pension fund, and argued before the regulator that the plan should be amended so that new employees could join.
The members, undeterred by the Supreme Court of Canada’s ruling that the closed plan could not be terminated under an old common law doctrine (known as the rule in Saunders v. Vautier) requested that the regulator terminate the plan. The Superintendent refused to exercise her discretion to terminate the Rogers pension plan.
The members had the Superintendent’s decision reviewed by the Federal Court. The Federal Court of Canada agreed with the members, finding that the Superintendent’s refusal to exercise her discretion was unreasonable. The recent appeal handed down by the Federal Court of Appeal came to the opposite conclusion.
The Court noted that the Superintendent based her decision on the premise that the continued existence of a pension plan is a worthy goal and that the objects of the Plan and of the PBSA were better served by using the actuarial surplus in the plan to fund pensions for members of the Plan, including new members, rather than to provide a windfall to the current members of the plan.
Further, the Court of Appeal held that the Superintendent was under no duty to act in accordance with the wishes of the plan members.
The Federal Court of Appeal’s judgment joins a growing list of decisions that can be characterized as “pro-employer” -- in taking a dim view of efforts by members to access surplus funds in the context of internal plan reorganizations where the surplus could continue to be used to provide benefits.
