Pensions & Benefits Law : Canada Pension & Benefits Lawyers & Attorneys : Osler Hoskin & Harcourt Law Firm: Post-Employment Benefits & Defined Benefit Plans : Toronto, New York

In King v. King, Mr. King, a former member of a registered pension plan sought a declaration that his former wife had waived her entitlement to a survivor’s pension. The Court dismissed Mr. King’s application.

Shortly after their separation, Mr. and Mrs. King entered into a separation agreement, which contained a general pension release, providing, in part, that Mr. King would be entitled to the “...sole use, ownership and benefit of... pension plans registered in his name as at the date of separation...” This included the benefits to which Mr. King was entitled under the registered pension plan. The separation agreement further provided that Mr. and Mrs. King would each execute any documents required to give effect to the terms and intent of the separation agreement.

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In an apparent effort to improve plan transparency, the Financial Services Commission of Ontario (FSCO) has released a consultation policy to clarify a plan administrator’s responsibilities when responding to and managing inquiries and complaints from plan beneficiaries (Policy).

In addition to providing information already contained in the Pension Benefits Act (Ontario) (PBA) and other FSCO policies regarding the administrator’s responsibility to manage and administer the pension plan and the duty of care it owes to plan beneficiaries, the Policy provides some suggestions on how to effectively communicate with plan beneficiaries and provide timely responses to their inquiries and complaints.

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A few recent cases have highlighted the importance of setting up appropriate governance and oversight processes to select and monitor plan investments. This is particularly true in the current era of underfunded pension plans, where the investment of plan assets may come under greater scrutiny.

In one of these cases, which is still pending before the Québec Superior Court, the pension committee of the Pension Plan for Employees of the City of Sherbrooke (the Committee) retained the services of an actuary employed by Mercer to assist in revamping its investment policy and selecting investment managers. The actuary recommended that a portion of the assets of the plan be invested in hedge funds, and suggested a number of potential investment managers. With the assistance of the actuary, the Committee ultimately retained a firm called Norshield and invested $17 million in its hedge fund. Two years later, Norshield was placed in receivership and the plan’s investment had to be entirely written off.

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In this post, I will discuss important pension plan funding changes implemented by Bill 120, Securing Pension Benefits Now and for the Future Act, 2010. (Previous posts have considered some of the more controversial aspects of Bill 120, namely, changes to the rules regarding surplus withdrawals, contribution holidays and plan expenses.)

Like many aspects of Bill 120, these changes have not yet been proclaimed into force, and regulations are needed to provide much of the underlying details. However, plan sponsors and administrators should start considering the implications of these amendments now since they could require changes to current practices.
 

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