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 Canada Life Canadian Employees Pension Plan, Registration Number 0354563
Canada Life Assurance Company
255 Dufferin Avenue
London, ON N6A 4K1
Mr. Wallace B. Robinson
Assistant Vice-President, Pension Benefits, Human Resources
Employer and Plan Administrator
Pelican Food Services Limited
c/o Canada Life Assurance Company
255 Dufferin Avenue
London, ON N6A 4K1
NOTICE OF PROPOSAL
I PROPOSE TO MAKE AN ORDER in respect of The Canada Life Canadian Employees Pension Plan, Registration Number 0354563 (the “Plan”) under section 69(1)(d) and section 69(1)(e) of the PBA that the Plan be partially wound up in relation to those members and former members of the Plan who ceased to be employed by Pelican Food Services Limited between February 23 and 28, 2001.
- Pelican Food Services Limited (“Pelican”) is a subsidiary of the Canada Life Assurance Company (“Canada Life”) and participated in the Plan while Pelican operated the Canada
Life employees’ cafeteria at Canada Life’s head office at 330 University Avenue in Toronto.
- Pelican operated its business at one location -- Canada Life’s head office at 330 University Avenue in Toronto.
- Pelican ceased to participate in the Plan as of January 31, 2001 as a result of outsourcing of food services by Canada Life.
- At the date that Pelican ceased its participation in the Plan it had 39 employees.
- All 39 employees terminated membership in the Plan between February 23 and 28, 2001.
- At the date the 39 employees terminated their membership in the Plan, 37 of the 39 employees were fully vested. Four of the vested members had more than 55 points (age and service).
- Section 69(1)(d) provides that the Superintendent may require the full or partial wind up of a pension 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 members of the Plan (100% of employees of Pelican) ceased to be employed by Pelican between February 23 and 28, 2001 as a result of the discontinuance of the business of Pelican at its location at 330 University Avenue in Toronto. 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 that the Superintendent may require the full or partial wind up of a pension plan if “all or a significant portion of the business carried on by the employer at a specific location is discontinued”.
- There was a discontinuance of the business carried on by Pelican at 330 University Avenue in Toronto. There was also a cessation of the employment of 39 Pelican employees as a result of the discontinuance. As a result there are grounds under section 69(1)(e) of the PBA to order a partial wind up of the Plan.
- The Superintendent’s authority to order a partial wind up is discretionary. Section 69(1) states that the Superintendent “by order may require the wind up of a pension plan in whole or in part…”. [Emphasis added]
- The purpose of the partial wind up provisions in the PBA (section 69) generally is to protect employees and in particular older employees who lose their jobs (and their ability to accrue pension benefits) as a result of the discontinuance or reorganization of the employer’s business, by requiring the employer to give them the same benefits to which they would be entitled on a full wind up (section 74) and requiring the employer to fully fund the portion of the plan attributable to the terminated employees (section 75). Persons affected by a partial wind up may also be entitled to share in an immediate distribution of surplus just as they would on a full wind up. A full or partial wind up also triggers the right to an immediate vesting of all pension benefits.
- This is not a situation where the policy objectives of the partial wind up provisions in the PBA have been satisfied without the necessity of a wind up order. The Pelican employees who have lost their jobs, in particular the 4 long service workers, have not received equivalent rights and benefits to which they are entitled under section 74 and 75 of the PBA. Further, this is not a case where the 39 employees are continuing to accrue retirement benefits under a successor plan created by their employer, with service credits accumulated under the Plan being carried forward into the successor plan.
- The actuarial valuation reports as at January 1, 1997 and January 1, 2000 indicate that the Plan was in a surplus position in February 2001. The terminated employees may have a right to a surplus distribution.
- Therefore there is good reason for the Superintendent to exercise his discretion to order a partial wind up of the Plan.
- Such further and other reasons as may come to my attention.
YOU ARE ENTITLED TO A HEARING by the Financial Services Tribunal (the “Tribunal”) 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
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 with Pelican was terminated between February 23 and 28, 2001.
DATED at Toronto, Ontario, this 19th day of September 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.