2016 bc pension summit · 2016-03-03 · north america, local 1059 (onca, 2015) ... •...

2016 BC PENSION SUMMIT

February 26, 2016

LEGAL UPDATE

Overview: Statutory Developments

• BC PBSA (Finally !)

• Implementation of Alberta EPPA

• Saskatchewan Solvency Moratorium

• Amended federal pension investment rules

(Schedule III)

• Bill C-4: Repeal of Bill C-377

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Overview: Case Law

• Duncan v. RWUPP (BCHRT, 2016)

• Garcia v. Labourers’ International Union of

North America, Local 1059 (ONCA, 2015)

• Trustees of the International Brotherhood of

Electrical Workers, Local 353 Trust Funds v.

Shojaei et al (ONSC, 2014)

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New BC PBSA

• History

• Old PBSA in place since 1993

• Joint Expert Panel on Pension Standards

(JEPPS) commissioned by BC and Alberta with

goal to harmonize and modernize

• New Pension Benefits Standards Act

• Enacted in May of 2012

• Regulations released May 11, 2015

• In force September 30, 2015

• Staggered implementation dates

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New BC PBSA


• Amendments to plan text to comply with

PBSA (despite administration deadline of

September 30, 2015) must be filed by March

31, 2016

• Governance and Funding Policies must be in

place by March 31, 2016 for most plans

• First plan assessment must be conducted by

end of 2016 (for most plans)

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New BC PBSA

• Selected rule changes

• Immediate vesting

• Earnings not hours based eligibility test for collectively bargained multi-employer plans

• Must permit unlocking for shortened life expectancy and non-residency

• Changes to timing and process for spousal waivers

• New plan design options

• Jointly sponsored plan

• Target benefit provision

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New BC PBSA

• New policies and assessment required

• Governance Policy

• Administrator must comply with governance

policy

• Accessible to plan members, employers and

unions

• Funding Policy

• Must provide to actuary, but no statutory

requirement to comply with funding policy

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New BC PBSA

• New “self-assessment” required

• Must assess compliance with Act, governance,

funding and investment related documents, as well

as performance of trustees, administration staff

and service providers

• Must be in writing and available to SOP on request

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New Alberta EPPA

• Came into force September 1, 2014


• EPPA Update 15-01 extended amendment

filing deadline to December 31, 2015 to

harmonize with BC deadline

• Similarly new December 31, 2015 deadline for:

Governance Policy

Funding Policy (if required)

• Extensions to March 31, 2016 available

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Saskatchewan

• New Solvency Moratorium effective May 1, 2015 • Applies to private sector negotiated cost plans

• 4 year moratorium from funding a solvency deficiency established in valuation filed with review date in specified window (Dec. 31, 2012 – Dec. 31, 2014)

• No obligation to increase contributions or decrease benefits to meet the solvency tests during moratorium period (but no improvements)

• Triennial valuation requirement suspended during moratorium period

• Plan members must be advised

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Schedule III Investment Rules

• Incorporated by reference into BC, AB, SK,

MB, ON and NL pension investment rules

• Coming into force July 1, 2016

• 2 significant changes

• 10% rule calculated on market value

• Related party investment rules

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• 10% Rule

• Market value of plan’s assets, not book value

• Purchase test – must be met at time of

investment not on a continuous basis

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• Related party investing

• General Rule:

• Investments, loans and other transactions

with “related parties” prohibited

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• Related party investing (cont)

• Exceptions Maintained:

• Transactions for the operation/administration

of plan on terms no less favourable than

market

• But cannot involve investments in, or loans to,

the related party (new)

• Transactions that are “nominal or immaterial”

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• Related party investing (cont)

• Removed Exception:

• Securities acquired at a public exchange (now

must meet one of other exceptions)

• A fund holding securities of a related party

will have 5 years to divest

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Bill C-4: Repeal of Bill C-377

• C-377 in force December 30, 2015

• Requires unions and other labour

organizations to prepare and make public

detailed financial statements

• MNR waived 2016 filing requirement

• Will be repealed by Bill C-4

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Duncan v. RWUPP

• Married members receive J & S 60 (no

adjustment to member’s pension)

• Single members receive G10

• Usually, married members’ pension more

valuable

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Duncan v. RWUPP

• Duncan claimed he was being discriminated

against on the basis of marital status (he was

single), contrary to s. 13(1)(b) of the HRC

• RWUPP relied on s. 13(3)(b)

• Can discriminate on basis of marital status, age,

disability or sex in “bona fide … pension plan”

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Duncan v. RWUPP

• Great deal of litigation, including SCC

decisions, regarding meaning of a “bona fide

pension plan”, and scope of exception

• “legitimate plan” – objective test

• “adopted in good faith and not for the

purpose of defeating protected rights” –

subjective test

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Duncan v. RWUPP

• “legitimate plan”

• Registered under PBSA and ITA

• Compliant with PBSA and ITA

• Substantial asset base and significant

number of members

• RWUPP satisfied all requirements

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Duncan v. RWUPP

• No evidence of bad faith, or that plan created

to defeat members’ rights

“bona fide pension plan”

s. 13(3)(b) applied → complaint dismissed

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Duncan v. RWUPP

Lessons from Duncan

• An RPP registered under and in compliance

with PBSA and ITA presumptively qualifies as a

“bona fide pension plan”

• Can therefore have distinctions based on age,

sex and marital status in such a plan

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Garcia v. Labourers’ International

Union

• Garcia was in contravention of dual union policy

and expelled from Labourers union, thereby

losing membership in its benefit plan

• Contributions to benefit plan held in dollar bank

accounts to determine eligibility for payment of

benefits

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Union

• At time of expulsion, Garcia had “$20,000” in

dollar bank account

• Garcia claimed he continued to be a beneficiary

under trust as long as he had credits in dollar

bank account

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Union

• Court of Appeal upheld decision that Garcia

was not entitled to value of dollar bank

account

• Concept of individual accounts is “notional

concept” that is logical and necessary way to

assess minimum eligibility NOT a self-

funded/insured system where value of

employee’s benefits is equal to contributions

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Union

• Court also addressed issue of conflict of interest

where a union officer acts as a trustee of a

benefit plan

• Did trustees who were also union officers breach

their fiduciary duties as trustees by adopting and

enforcing dual union policy?

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Union

• Union officers who are trustees can wear “two

hats” (just like employer representatives who are

also trustees)

• Were acting as union officers, not trustees, when

adopting and enforcing dual union policy

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Union

• Power imbalance of employer-administrator not

found in context of union-administrator

• Union members have democratic control over

union leadership

• Union members ratify collective agreements

• Unions have duties to members (fair

representation, fair referral, refrain from

intimidation and coercion)

• Greater latitude given to trustees who are elected

union officers?

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Union

Lessons from Garcia

• Benefit plans/trust with dollar bank mechanism

are for the benefit of a group and not intended

to operate as a savings account that can be

cashed in on demand

• When addressing conflict of interest must

consider context in which it arises

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IBEW v. Shojaei

• Defendant spouse applied for and received

pre-retirement death benefit and survivor

health benefits upon purported death of

husband (member)

• Five years later, member and defendant

spouse found to be alive in California,

extradited back to Canada and prosecuted

for criminal offences

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IBEW v. Shojaei

• Trustees alleged fraud, deceit, fraudulent

misrepresentation, conspiracy, conversion, and

unjust enrichment

• Trustees also sought an order that they need not

pay out anything else to the defendants until the

debt is repaid (death benefit), punitive damages

given the nature of the conduct and costs on an

indemnity basis

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IBEW v. Shojaei

• All relief sought granted including an order

that no further amounts need be paid from

the Plans until the debt is repaid (and offsets

may be applied if funds become due)

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IBEW v. Shojaei

Lessons from Shojaei

• Can recover in full if member fakes death

• Can also get order providing for offsets

against future benefit claims

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2016 bc pension summit · 2016-03-03 · north america, local 1059 (onca, 2015) ... •...

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