Arbitrator Orders Unlocateable Plan Member Rights Preserved on Plan Wind Up

Posted on April 28, 2011 by Ian J.F. McSweeney

Toronto Dress & Sportswear Manufacturers’ Guild Inc. v. Unite Here Ontario Council, [2010] CanLII 56592 (Ont. Arb.)

When the Toronto Dress and Sportswear Industry Retirement Fund was wound up in April of 1996, the plan was severely underfunded. Plan assets were only sufficient to fund about 41% of plan liabilities. As the wind up proceeded, extensive efforts were made to contact all members and former members. In the end, however, there remained 249 missing, but identifiable members and approximately $1 million in undistributed plan assets relating to their 41% share of pension liabilities. The plan Trustees wanted to complete the wind up distributions, but they could not agree on how the missing member assets should be treated.

Continue Reading...
Tags: , ,

Federal Pension Reform Comes Into Force

Posted on April 15, 2011 by Lesha Van Der Bij

Certain provisions of Bill C-9, last year's Budget Bill, which amended the federal Pension Benefits Standards Act (PBSA), have been proclaimed in force.

As noted in an earlier blog post, Bill C-9 included a number of significant amendments to the PBSA related to funding, plan wind-ups, vesting, and plans at risk.  Briefly, the sections coming into force as of April 1, 2011 relate to:

  • an employer's ability to use letters of credit in lieu of solvency payments;
  • the ability of employers and plan members to agree to "workout schemes" (i.e., short moratoriums on deficit payments and changes to pension arrangements) where the employer is unable to meet the statutory funding requirements;
  • the rights of members, former members and certain others to new types of plan information (e.g., actuarial reports, and documents related to workout schemes and letters of credit);
  • the Superintendent’s authority to appoint a replacement administrator in insolvencies and certain other circumstances; and
  • payments required on plan termination.

Effective July 1, 2011, provisions related to immediate vesting of benefits will come into force.

Tags: , ,

Can 401(k) and Pension Plans Still be Disqualified? IRS and the Tax Court Remind Us That They Can

Posted on April 11, 2011 by Carol Buckmann

There have been some well known cases in which qualified plans were disqualified retroactively by the IRS for less than major violations of the rules. In one of the most well known, Tionesta Sand and Gravel 73 T.C. 758 (1980), affd without opinion 642 F. 2d 444 (3d Cir. 1981), a plan was disqualified for failing to contain language requiring full vesting on any plan termination or complete discontinuance of contributions, even though no plan termination had occurred. However, as a result of the IRS' formal correction program for plan mistakes, plan disqualification has become a very rare event.

Continue Reading...
Tags:

Ontario Adopts Changes to Federal Investment Rules

Posted on April 4, 2011 by Lesha Van Der Bij

Effective March 25, 2011, Ontario amended the regulations under its Pension Benefits Act (the Regulations) to adopt the federal investment rules “as they may be amended from time to time.”

Previously, Ontario had adopted the investment rules as they read on December 31, 1999 – requiring any changes to the rules made by the federal government to be specifically adopted by the Ontario government. This change to the Regulations means that Ontario registered pension plans will now be subject to the most recent amendments to the federal investment regulations, and any future changes to these regulations will automatically apply to Ontario plans.

Continue Reading...
Tags: , , ,