Atlantic Industries (Canada) Limited - May 17, 2007

IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990,c. P.8 (the “PBA”).

AND IN THE MATTER OF a Proposal by the Superintendent of Financial Services to Refuse to Approve a Partial Wind up Report under section 70 of the PBA relating to the Atlantic Industries (Canada) Limited Employees Pension Plan, Registration Number 0209825.

 

AND IN THE MATTER OF Proposal by the Superintendent of Financial Services to require a New Partial Wind up Report to be prepared and filed within sixty (60) days from the date of this Notice of Proposal, pursuant to sections 70 and 88 of the PBA relating to the Atlantic Industries (Canada) Limited Employees Pension Plan, Registration Number 0209825.

 

 

TO:                

Atlantic Industries (Canada) Limited
PO Box 1006, 3155 Route 935
Dorchester, NB E4K 3V5

 

Attention:      

Brian Muir, CA
Vice-President, Finance COO                                  

 

 

NOTICE OF PROPOSAL

I PROPOSE TO REFUSE TO APPROVE:

 

  • The Actuarial Report on the Partial Wind-up of the Atlantic Industries (Canada) Limited Employees Pension Plan, Registration No. 0209825 (the “Plan”) as at December 4, 1987       (the “Initial Report”), and

 

  • The Revision to the Initial Report dated August 1, 1990 (the “Revised Report”) relating to the Plan, pursuant to section 70 of the PBA.

 

I ALSO PROPOSE TO REQUIRE A NEW REPORT to be prepared and filed within sixty (60) days from the date of this Notice of Proposal, which shall deal with the distribution of surplus related to the partial wind up effective December 4, 1987 relating to the Plan, pursuant to sections 70 and 88 of the PBA.

 

 

 

REASONS FOR THE PROPOSED ORDER:

 

  1. The Plan was partially wound up effective December 4, 1987. A partial wind up report was filed with the Superintendent of Financial Services (the “Superintendent”) on May 16, 1989 (the “Initial Report”). The Initial Report did not indicate that there was an excess of partial wind up assets over liabilities.

  2. The Plan Actuary submitted a revision to the Initial Report, a Revised Solvency Balance Sheet (the “Revised Report”), to the Financial Services Commission of Ontario (“FSCO”) dated May 16, 1989. The Revised Report shows that the excess of partial wind up assets over liabilities is $25,604. The Revised Report did not contain any proposal for the distribution of the surplus related to the partial wind up.

  3. On March 13, 1992 the Superintendent approved the distribution of basic benefits pursuant to section 70(3) of the PBA and advised Mutual Life of Canada (the “Plan Actuary”) that any proposals with respect to the distribution of surplus would be dealt with separately.

  4. FSCO by letter August 20, 2004, advised Atlantic Industries (Canada) Inc. (the “Company”) that the Revised Report did not set out any proposal regarding the distribution of surplus. FSCO requested that the Company submit a notice of the Company’s intentions regarding the distribution of surplus by October 19, 2004.

  5. By letter dated October 26, 2004, FSCO granted an extension for the Company to submit its proposals regarding the distribution of surplus to January 7, 2005.

  6. By letter dated May 31, 2005 FSCO again requested that the Company submit its proposals regarding the distribution of surplus and gave the Company a deadline of June 29, 2005. FSCO letter dated August 22, 2005, granted a further extension to September 16, 2005.

  7. The Company advised FSCO, by letter dated September 1, 2005, that it had retained Mercer Human Resource Consulting Limited (“Mercer”) to review the information regarding the partial wind-up and requested an extension to December 31, 2005 for filing the financial update.

  8. To date the Company has not submitted a notice of its intentions regarding the distribution of surplus as set out in the Revised Report of May 16, 1989.

  9. Section 88(2)(c) of the PBA states that the Superintendent may make an order requiring the preparation of a new report and specifying the assumptions or methods or both that shall be used in the preparation of the new report, if the Superintendent is of the opinion that a report submitted in respect of a pension plan does not meet the requirements and qualifications of the PBA, regulations, or the pension plan.

  10. Section 1 of the PBA defines “partial wind up” as meaning a distribution of assets of the Plan that are related to the partial wind up.

  11. Section 1 of the PBA defines “surplus” as the excess of the value of the assets of a pension fund related to a pension plan over the value of the liabilities under the pension plan, both calculated in the prescribed manner.

  12. Section 70(6) of the PBA states that on a partial wind up, members, former members, and other persons entitled to benefits under the pension plan 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.

  13. Section 70(1)(c) of the PBA states that the administrator shall file a partial wind up report that sets out the methods of allocating and distributing the assets of the pension plan and determine the priorities for payment of benefits.

  14. The Supreme Court of Canada has confirmed, in Monsanto Canada Inc. et al. v. Superintendent of Financial Services (2004 SCC 54), that members affected by a partial wind up are entitled to have surplus assets distributed on the date of the partial wind up.

  15. Therefore, the Revised Report does not comply with the PBA because it does not provide for the distribution of surplus on partial wind up.

  16. Section 87(2)(c) of the PBA states that the Superintendent may make an order if the Superintendent is of the opinion, upon reasonable and probable grounds, that the administrator or employer of the plan is contravening a requirement of the PBA or regulations.

  17. On a full wind up, all assets of the plan are distributed. If there are surplus assets and if the members are entitled to surplus under the terms of the pension plan, the surplus must be distributed to the members. If there are surplus assets, and the employer is entitled to surplus under the terms of the pension plan and wants it paid to the employer, the employer must apply to the Superintendent for the Superintendent’s consent to withdraw surplus pursuant to section 79(3) of the PBA. The employer must also obtain the consent of at least 2/3 of the members pursuant to section 8 of Regulation 909, R.R.O. 1990.

  18. Because the members are entitled to a surplus distribution on full wind up if they are entitled to surplus under the plan, they have the same right on partial wind up.

  19. Because the members are entitled to consent to a surplus withdrawal by the employer on full wind up if the employer is entitled to surplus under the plan, they have the same right on partial wind up.

  20. Such further and other reasons as may come to my attention.

 

 

YOU ARE ENTITLED TO A HEARING before the Financial Services Tribunal of Ontario (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 REQUEST must be delivered to:

Financial Services Tribunal
5160 Yonge Street, 14th Floor
Toronto ON M2N 6L9

Attention: The Registrar

 

For further information, contact the Registrar of the Tribunal by phone at 416-226-7752, or toll free at 1-800-668-0128 ext. 7752, or by fax at 416-226-7750.

 

IF YOU FAIL TO REQUEST A HEARING WITHIN THIRTY (30) DAYS, I MAY ISSUE THE ORDERS PROPOSED IN THIS NOTICE OF PROPOSAL.

 

 

DATED at Toronto, Ontario, this 17th day of May, 2007.

 

 

                                                     
K. David Gordon
Deputy Superintendent, Pensions

 

*PURSUANT TO section 112 of the Act, any Notice, Order or other document is sufficiently given, served or delivered if delivered personally or sent by first class mail and any document sent by first class mail shall be deemed to be given, served or delivered on the seventh day after the day of mailing.


 
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