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Recent Developments in Pensions and Benefits Law

GoTo Webinar, August 23, 2016

Kim Ozubko

AGENDA

1. CPP and the ORPP – What’s New?

2. Legislative and Case-Law Update

3. Current Issues in Plan Communications

CPP and the ORPP: What’s New?

CPP Enhancement

• June 20th agreement in principle to enhance

CPP

• All provinces except BC and Quebec have

ratified agreement in principle

• BC expected to ratify agreement in principle

• Federal government expected to introduce

supporting legislation in Fall 2016

CPP Enhancement (cont’d)

• Key features:

– Income replacement under CPP to be increased from 1/4 to 1/3

of pensionable earnings

– Maximum amount of income subject to CPP to be increased by

14%

– Federal Working Income Tax Benefit to be enhanced to offset

impact of increased contributions on low-income workers

– Tax deduction (instead of tax credit) to be provided for employee

contributions associated with the enhancement

What about the ORPP?

• ORPP was to be implemented beginning

January 1, 2018

• ORPP was to apply to Ontario employees

without a comparable workplace pension plan

• Ontario government has announced that if

agreement in principle is ratified, ORPP will not

be implemented

Legislative Update: Some Highlights

Alberta – EPPA Update

• New Employment Pension Plans Act (“EPPA”)

and EPPA Regulations September 1, 2014

• Amendments to comply with new provisions

required to be filed by December 31, 2015

(extensions available until March 31, 2016)

• Applies to plans registered in Alberta and to

plans registered outside of Alberta with

members employed in Alberta

Alberta – EPPA Update (cont’d)

• EPPA – Key changes

– Immediate vesting

– Exceptions to locking-in

– Enhanced disclosure

– Phased retirement (optional)

– Governance and funding policies

– Plan assessments

BC - PBSA Update

• New Pension Benefits Standards Act (“PBSA”)

and PBSA Regulations effective September 30,

2015

• Amendments to comply with new provisions

required to be filed by March 31, 2016

• Applies to plans registered in BC and to plans

registered outside of BC with members

employed in BC

BC – PBSA Update (cont’d)

• PBSA – Key changes

– Immediate vesting

– Exceptions to locking-in

– Enhanced disclosure

– Phased retirement (optional)

– Governance and funding policies

– Plan assessments

Saskatchewan and Manitoba Update

• Saskatchewan

– Consultation paper regarding private sector

negotiated cost pension plans released in May

– Deadline for comments: July 31, 2016

• Manitoba

– No significant developments

Ontario – PBA Update

• Recent changes

– Regulations amended to allow existing rules to apply

to asset transfers involving multi-employer plans

– New regulations extending temporary solvency

funding relief for defined benefit plans

– Changes to required content of and filing

requirements for Statements of Investment Policies

and Procedures

– Changes to required content of annual member

statements

Ontario – PBA Update (cont’d)

• Pending changes

– New rules regarding pension advisory committees

– Introduction of biennial statements for former and

retired members

Ontario – PBA Update (cont’d)

• Proposed changes

– Proposed amendment to eliminate the 30%

investment rule

– Review of solvency funding framework for DB plans

• Deadline for submissions: September 30, 2016

Quebec Update

• Reform of overall pension system since 2014

– Most recent reform under Bill 57 impacts private

sector defined benefit plans

• Funding on solvency basis replaced with funding on going-

concern basis plus stabilization provision

Nova Scotia – NSPBA Update

• Nova Scotia Pension Benefits Act (“NSPBA”)

amended effective June 1, 2015

• Amendments to comply with new provisions

required to be filed by June 1, 2018

• Applies to plans registered in Nova Scotia and to

plans registered outside of Nova Scotia with

members employed in Nova Scotia

Nova Scotia – NSPBA Update (cont’d)

• NSPBA – Key changes

– Immediate vesting

– Content of annual member statements

– Small benefit limit

– Letters of credit

– Partial wind-ups retained

Federal – PBSA Update

• Recent changes – effective July 1, 2016

– Changes in federal investment rules

• 10% rule

• Related party rule

• Definitional changes

– Enhanced disclosure requirements

Federal – PBSA Update (cont’d)

• Proposed changes

– Consultation regarding the 30% rule for plan

investments announced in June 2016

• Deadline for submissions: September 16, 2016

Case-Law Update

Is medical marijuana covered under a

group benefits plan?

• The Corporation of the City of Hamilton and

Hamilton Professional Firefighters Association

– Grievor alleged that wife’s medical marijuana should

have been reimbursed under group benefits plan

– Collective agreement provided for reimbursement of

drugs purchased on “prescription of a medical doctor”

and with a drug identification number

– Grievance denied

What can you do if you have overpaid

pension benefits?

• Carleton University v. Threlfall (Quebec)

– Pensioner disappeared but plan sponsor continued

life-only pension payments to pensioner’s guardian

because of “presumption of life”

– Pensioner found nearly 7 years after disappearance;

pensioner determined to have died at time of

disappearance

– Plan administrator sought restitution of overpayments

– Restitution order granted

The importance of clear drafting

• Boys and Groskopf v. Shoppers Drug Mart Inc.

– Boys and Groskopf were entitled to grow-in benefits

under RPP because of partial plan wind-up

– Plan sponsor deducted value of grow-in benefits

payable under RPP from benefits payable under

SERP

– Boys and Groskopf objected to deduction

– Ontario courts agreed with approach of plan sponsor:

plan documents were clear – the SERP required the

deduction of the total benefit earned under the RPP

Current Issues

in

Plan Communications

Enhanced Disclosure Requirements

• Changes to required content in annual member

statements

• New former or retired member statements in

several jurisdictions (e.g., Ontario, Federal, BC,

Alberta)

Case-law Developments: Be careful what

you say…

• NCR Canada Ltd. v. International Brotherhood of

Electrical Workers, Local 213

– DB plan amended in 2001 to add DC component; active

members could elect to continue accruing DB benefits or move

to DC component

– 19 union members elected to continue accruing DB benefits

– Plan amended in 2012 to cease all DB accruals

– Union challenged amendment and argued company was

estopped from amending plan because of prior representations

– Arbitrator agreed; appeals dismissed

Case-law Developments: Be careful what

you say… (cont’d)

• Kassburg v. Sun Life Assurance Company of

Canada

– Plaintiff filed claim against insurance company after

application for LTD benefits denied

– Insurer argued claim was outside limitation period

– Court reviewed insurance policy and policy booklet

and found language on limitation period was

ambiguous

– Claim allowed to proceed

Case-law Developments: Be careful what

you say… (cont’d)

• Feldstein v. 364 Northern Development

Corporation – Feldstein, who suffered from cystic fibrosis, was given incorrect

information about LTD from 364 during interview process

– Feldstein accepted job offer on understanding that he would be eligible

for a certain amount of LTD after 3 months

– Six months after beginning work, Feldstein became ill, applied for, and

was awarded a lower amount of LTD than expected

– Feldstein brought action for negligent misrepresentation

– Court found 364 liable and awarded damages for lost LTD benefits and

$10,000 for aggravated damages

Case-law Developments: Be careful what

you say… (cont’d)

• Deraps v. Labourer’s Pension Fund – A Classic

– Plaintiff waived entitlement to joint and survivor

pension but subsequently challenged validity of

waiver

– Plan administrator had duty to ensure that plaintiff

fully understood the waiver

– Plan administrator failed to provide complete and

clear information on effect of waiver

What is a plan administrator to do?

• Don’t overpromise

• Ensure plan documents are internally consistent

and consistent with each other

• Provide full and complete information to

members and other plan beneficiaries

• Check your facts

Questions?

Kim Ozubko

kozubko@millerthomson.com

416.597.4338

Thank you

www.millerthomson.com

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