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 Refuse to Consent to a Transfer of Assets under section 81 of the PBA in respect of the following pension plans:
a) Willett Foods Inc. Retirement Plan Registration Number 340174 (the “Willett Plan@) and
b) Pension Plan for Hourly-Paid Employees of Loblaw Supermarkets Limited Registration Number: 954941 (the “Loblaw Plan”)
Loblaws Companies Limited
22 St. Clair Avenue East,
Employer and Administrator
NOTICE OF PROPOSAL
I PROPOSE TO REFUSE TO CONSENT to a transfer of assets effective December 31, 2001 from the Willett Foods Inc. Retirement Plan Registration Number 340174 (the “Willett Plan”) to the Pension Plan for Hourly-Paid Employees of Loblaw Supermarkets Limited Registration Number: 954941 (the “Loblaw Plan”) under section 81 of the PBA.
- Loblaws Companies Limited (the “Applicant”) is the Employer and Administrator of the Willett Plan and the Loblaw Plan.
- In April 2003, the Applicant filed with the Superintendent of Financial Services (the ASuperintendent@) an application for consent to a transfer of assets from the Willett Plan to the Loblaw Plan. The details of the proposed transfer were set out in a combined Actuarial Valuation and Merger Report as at December 31st, 2001 for the Loblaw Plan prepared by Rosario Cristiano of Towers Perrin Inc, in December 2002.
- On March 12, 2004, the Superintendent=s staff wrote to Mr Erran Thomas, a Pension Analyst with the Applicant, identifying a number of issues that needed to be addressed before the Application could be approved. One of the issues which staff identified to be addressed was the implications of Ontario Court of Appeal=s decision in Aegon Canada Inc. and Transamerica Life Canada v. ING Canada Inc. O.J. No. 4755 (ATransamerica@).
- Transamerica is a case about an asset transfer from a pension plan that was subject to a trust and in a surplus position, to a pension plan that was not subject to a trust and in a deficit position. After the transfer, the actuarial surplus that derived from the trust plan was used to fund the employer=s obligations under the non-trusted plan. The Court of Appeal for Ontario held that the terms of the trust were not altered by the transfer of assets and the use of actuarial surplus to fund the non trusted plan was Across-subsidization@ that was not permitted by the terms of the trust. The Court ruled that the terms of the trust prevented the use of the assets in the trust for any purpose other than for the benefit of its beneficiaries.
- On April 19, 2004, Rosario Cristiano of Towers Perrin responded to the letter from FSCO of March 12, 2004. His letter acknowledged that both (defined benefit) plans were funded through a trust and included submissions as to why Transamerica should not apply to the Willett/Loblaw asset transfer. His submission however was limited to statements about the current plan provisions and did not provide copies of the language from the plan or trust to substantiated his position.
- On July 30, 2004 FSCO staff wrote to Mr. Cristiano setting out the FSCO policy that had been implemented in response to the Transamerica decision. This policy required the applicant to submit a historical analysis of the plans where one or more of the plans in question are a defined benefit pension plan and subject to a trust, and to demonstrate the decision is not applicable.
- On March 31, 2005 Alain Malaket of Loblaws Companies Limited wrote to FSCO responding to the letter that was sent to Mr. Cristiano. In the letter he stated that the Applicant was reviewing the historical documents, that they expected to complete the review by May 31, 2005, and would write to FSCO once they had the results.
- Since the letter of March 31, 2005, neither the Applicant or its consultant have provided submissions to FSCO which address FSCO’s concerns raised by Transamerica. FSCO has written to the Applicant on three occasions since that date and has not received a response. In its latest letter to Applicant dated September 27, 2006, FSCO staff indicated that it is the Applicant’s responsibility to ensure that an application complies with the PBA, and that a failure to adequately demonstrate compliance may result in the application being rejected. The Applicant was also advised that if it did not make further submissions by October 27, 2006, the application may be submitted to the Superintendent for a decision based on the information on file.
- The Applicant has not provided the Superintendent with a historical analysis of the Willett or Loblaw Plans that demonstrates the proposed asset transfer is authorized by the terms of the trust or plan text governing each Plan. The Application has now been outstanding for more than four years.
- Apart from the trust-related issues arising from Transamerica, this application does not contravene the Act or any policies of the Superintendent relating to transfers of assets under section 81 of the Act.
- 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 Act. 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, contact the Registrar of the Tribunal by phone at 416- 226-7752, 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 CARRY OUT THE PROPOSAL AS DESCRIBED IN THIS NOTICE.
DATED at Toronto, Ontario, this 13 day of July, 2007.
K. David Gordon
Deputy Superintendent, Pensions
175 Bloor Street East, South Tower, Suite 1501
Toronto, Ontario M4W 3T6
Attention: Rosario Cristiano
*NOTE - 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 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.