IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended (the "PBA@)
AND IN THE MATTER OF a Proposal of the Superintendent of Financial Services to Make an Order under section 69(1)(d) and section 69(1)(e) of the PBA relating to the Pension Plan For Employees of American Re-insurance Company Plan Registration # 0582601
American Re-insurance Company of Canada
c/o Munich Re-insurance Company
390 Bay Street, 22nd floor
Toronto Ont. M5H 2Y2
Attention: Denyse Stix Assistant Vice President, Human Resources
Employer and Plan Administrator
NOTICE OF PROPOSAL
I PROPOSE TO MAKE AN ORDER under section 69(1) (d) and section 69(1) (e) of the PBA that the Pension Plan For Employees Of American Re-insurance Company Registration Number 0582601, (the APlan@) be partially wound up in relation to those members and former members of the Plan who ceased to be employed by American Re-insurance Company during the period September 2002 until June 2005.
- Munich Re-insurance America, formerly called American Re-insurance Company (“the employer”) is a reinsurance company whose headquarters is in Princeton New Jersey and is licensed to carry on business as an insurer in Ontario and Quebec. During the beginning of the period described below it maintained offices in Montreal and Toronto. The Plan is a pension plan for its Canadian employees. The plan is administered by a related insurance company, Munich Re-Insurance Company of Canada.
- In or about September 2002, the employer decided to rationalize its Canadian operations, resulting in the closing of offices at 1250 Rene-Levesque Blvd West in Montreal and at 250 Yonge Street in Toronto. As a result of these closures the one Plan member in the Montreal office and 5 members of the 6 members of the Toronto office were terminated, between October 18, 2002 and June 1, 2005. The Plan now only has one active member who works at a different office location in Toronto.
- Section 69(1) (d) provides that the Superintendent may require the full or partial wind up of a plan if “a significant number of members of the pension plan cease to be employed by the employer as a result of the discontinuance of all or part of the business of the employer or as a result of the reorganization of the business of the employer.”
- A significant number of employees who were active members of the plan (6 out of 7 or 85%) ceased to be employed during the period October 2002 to June 2005 as a result of a reorganization of the business of the employer and as a result of the discontinuance of part of the employer’s business in Canada. As a result, there are grounds under section 69(1) (d) of the PBA to order a partial wind up of the Plan.
- Section 69(1) (e) provides the Superintendent may require the full or partial wind up of plan if “all or a significant portion of the business carried on by the employer at a specific location is discontinued”.
- During the period October 2002 to June 2005 all of the business of the employer was discontinued at the Montreal location and the 250 Yonge Street location in Toronto. As a result, there are grounds under section 69(1) (e) of the PBA to order a partial wind up of the Plan.
- Where it has been clearly demonstrated that the entitlements of the members affected by a partial wind up under the PBA have otherwise been provided, the Superintendent may exercise his discretion not to order a partial wind up.
- Section 70(6) of the PBA provides that on the partial wind up of a pension plan, the affected members shall have rights and benefits that are not less than the rights and benefits they would have on a full wind up of the pension plan on the effective date of the partial wind up.
- The actuarial valuation reports as at December 31, 2002 and December 31, 2005 indicate that the Plan was in a surplus position during the period December 31, 2002 and December 31, 2005. Surplus must be distributed on partial wind up.
- In addition, the PBA provides enhanced benefit entitlements to members affected by a partial wind up, including grow-in benefits under section 74. The actuarial information summary filed with Valuation Reports as of December 31, 1999 and December 31, 2002, indicates that certain members who were terminated as a result of the closure of the Toronto and Montreal offices may have 55 points and be eligible for grow-in benefits if the Plan is partially wound up. The employer has not provided grow-in benefits to the terminated employees.
- Therefore, there is good reason for the Superintendent to exercise his discretion to order a partial wind up of the Plan because those employees may have a right to surplus distribution and it has not clearly been demonstrated that other entitlements of these members on partial wind up, such as grow-in benefits under the PBA, have been otherwise provided.
- Such further and other reasons as may come to my attention.
YOU ARE ENTITLED TO A HEARING by the Financial Services Tribunal (the ATribunal@) pursuant to section 89(6) of the PBA. To request a hearing, you must deliver to the Tribunal a written notice that you require a hearing, within thirty (30) days after this Notice of Proposal is served on you.*
YOUR WRITTEN NOTICE must be delivered to:
Financial Services Tribunal
5160 Yonge Street
Toronto ON M2N 6L9
Attention: The Registrar
FOR FURTHER INFORMATION on a Form for the written notice, please see the Tribunal website at www.fstontario.ca or contact the Registrar of the Tribunal by phone at 416- 590-7294, toll free at 1-800-668-0128, ext. 7294, or by fax at 416-226-7750.
IF YOU FAIL TO REQUEST A HEARING WITHIN THIRTY (30) DAYS, I MAY CARRY OUT THE PROPOSAL AS DESCRIBED IN THIS NOTICE.
THE ADMINISTRATOR IS REQUIRED pursuant to section 89(5) to transmit a copy of this Notice of Proposal to members of the Plan whose employment was terminated during the period September 2002 until June 2005.
DATED at Toronto, Ontario, this 11th day of April, 2008.
K. David Gordon
Deputy Superintendent, Pensions
* NOTE - Pursuant to section 112 of the PBA any Notice, Order or other document is sufficiently given, served or delivered if delivered personally or sent by regular mail and any document sent by regular mail shall be deemed to be given, served or delivered on the seventh day after the date of mailing.