AlliedSignal Canada Inc. (Bendix) - August 10, 2006

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

AND IN THE MATTER OF an Application under section 78(4) of the Act submitted by Honeywell ASCa Inc. in respect of the Bendix Heavy Vehicles System, A Division of AlliedSignal Canada Inc., Hourly and Salaried Bargaining Unit Employees Pension Plan, Registration Number 586883

TO:

Honeywell ASCa Inc.
3333 Unity Drive
Mississauga, Ontario
L5L 3S6

Attention: Barbara Moreau
                 Senior Pension Analyst
                 Canada Business Services

       Applicant, Employer and Administrator of the Plan

NOTICE OF PROPOSAL

I PROPOSE TO REFUSE TO CONSENT
, under section 78(4) of the Act, to the application dated January 7, 2005, made by Honeywell ASCa Inc. (the “Applicant”) for payment to the Applicant from the pension fund for the Bendix Heavy Vehicles System, A Division of AlliedSignal Canada Inc., Hourly and Salaried Bargaining Unit Employees Pension Plan, Registration Number 586883 (the “Plan”), of an alleged overpayment by the Applicant to the pension fund for the Plan.

REASONS FOR THE REFUSAL:

  1. The Applicant is the Employer and Administrator of the Plan, which is a defined benefit plan.

  2. The Plan was fully wound up as at January 1, 1992.

  3. On January 6, 1995, the Superintendent of Pensions (now the Superintendent of Financial Services, or the “Superintendent”) approved the report that was filed with respect to the full wind up, subject to the Applicant funding the deficit that was identified in the report by way of a lump sum.

  4. The Superintendent has not yet received any indication that the deficit has been funded or that the funds related to the wind up have been disbursed.

  5. On January 7, 2005, the Applicant filed an application for the Superintendent’s consent to payment to the Applicant of an alleged overpayment to the Plan fund in the amount of $4,428.75.

  6. The alleged overpayment is the result of the Applicant’s purchase of certain annuities for Plan members from the Plan fund pursuant to a Block Annuity Quote given to the Applicant by The Standard Life Assurance Company (“Standard Life”) on or about March 27, 2002. These annuities were purchased in or about April of 2002.

  7. On or about March 11, 2004, Standard Life sent the Applicant a cheque in the amount of $4,428.75, advising that this amount represented a refund due to the final reconciliation of the Block Annuity purchase that was secured in 2002.

  8. Section 78(4) of the Act states:

    Subject to section 89 (hearing and appeal), the Superintendent may consent to payment out of a pension fund to an employer of an amount not in excess of the amount of an overpayment by the employer into the pension fund or of an amount paid by the employer that should have been paid out of the pension fund, but shall not consent unless the application is made in the same fiscal year as the fiscal year of the pension fund in which the overpayment or the payment occurred.

  9. The Applicant’s position is that this refund represents an overpayment that is the result of an administrative oversight, because the actual cost of the annuities was less than the original quote from Standard Life.

  10. The Superintendent’s position is that the alleged overpayment constitutes surplus that should remain in the Plan fund pending final distribution on full wind up.

  11. The Financial Services Commission of Ontario (“FSCO”) Policy R350-102, “Refund of
    Employer Overpayment”, lists three situations in which an employer may be considered to have over-contributed to the pension fund for the purposes of section 78(4) of the Act. The circumstances in this application do not fall within any of these situations. While these situations are expressed as non-inclusive in the Policy, the circumstances in this application are not even analogous to the situations in the Policy, which are,
    1. the employer has contributed on the basis of an actuarial report for which the effective date had passed but when the new report was filed, such contributions exceeded those required by the new report

    2. payments have been made directly by the employer and they should have been made from the pension fund, or

    3. employer contributions were paid into the pension fund of the wrong pension plan as a result of an administrative error.


  12. Section 75(1)(b)(ii) of the Act states that where a pension plan is wound up, the employer shall pay into the pension fund the value of the pension benefits accrued with respect to employment in Ontario vested under the pension plan, to the extent these benefits exceed the value of the assets of the pension fund.

  13. Section 32 of Regulation 909, R.R.O. 1990 (the “Regulation”) states that until the employer’s liability under section 75 of the Act is funded, the plan shall be annually reviewed and an actuarial report shall be annually prepared. Where such a report shows that there is no further amount to be funded, any surplus may revert to the employer subject to the requirements of section 79 of the Act.

  14. Section 1 of the Act defines “surplus” as the value of the assets of a pension fund related to a pension plan over the value of the liabilities under the pension plan. To the extent that the funds paid from the Plan fund exceeded the actual cost of the Block Annuities, this represents an excess of assets over liabilities and is therefore surplus as defined in the Act. The Superintendent can only consent to the payment of surplus to an employer if the requirements of section 79 of the Act have been met. The Applicant has not provided any evidence that the requirements of section 79 of the Act have been met. Nor has the Applicant filed any reports pursuant to section 32 of the Regulation.

  15. Section 78(4) of the Act states that the Superintendent shall not consent to payment out of a pension fund to an employer of an overpayment unless the application is made in the same fiscal year of the pension fund as the fiscal year in which the overpayment occurred.

  16. The alleged overpayment was made in 2002, and the Applicant was notified of the refund to the Plan on March 11, 2004. The fiscal year of the Plan is from January 1 to December 31.

  17. Therefore, even if there were grounds to treat the refund in this case as an overpayment within the meaning of section 78(4) of the Act, the application was not made in the same fiscal year of the pension fund as the fiscal year in which the overpayment occurred. The Applicant has not provided any adequate reasons for the time to be extended pursuant to section 105 of the Act.

  18. 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 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
14th Floor
Toronto, Ontario
M2N 6L9

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 CONTAINED IN THIS NOTICE.


DATED at Toronto, Ontario, this 10th day of August , 2006.

K. David Gordon
Deputy Superintendent, Pensions

*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 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 mailing.


 
Follow FSCO on social media  

Outage  Scheduled Online Service Disruption Notice
Please consult our outage schedule for more details.