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)(b) and to Make an Order under sections 55(2) and 87(2)(c) of the PBA in respect of the Wescan Systems Limited Union Pension Plan, Registration Number 1029693.
Wescan Systems Limited
777 Walker’s Line
Burlington, ON L7N 2G1
Att’n: John Murray, President
Employer and Administrator of the Plan
NOTICE OF PROPOSAL
I PROPOSE TO MAKE AN ORDER under section 69(1)(b) of the PBA that the Wescan Systems Limited Union Pension Plan, Registration Number 1029693 (the “Plan”) be wound up as at November 9, 2007.
I ALSO PROPOSE TO MAKE AN ORDER under sections 55(2) and 87(2)(c) of the PBA that Wescan Systems Limited remit all outstanding contributions to the Plan.
- Wescan Systems Limited (the “Company”) is the employer and administrator under the Plan.
- The Plan is governed by the PBA and Regulation 909, R.R.O.1990 made under the PBA as amended (the “Regulation”).
- The Plan is a single employer, defined benefit, non-contributory plan, established effective March 1, 1996.
- Section 5.10 of the Plan text provides that the Company will contribute amounts not less than those certified by the Actuary as necessary to provide the benefits accruing to Participants during the current year pursuant to the Plan and to make provision for the amortization of any initial unfunded liability or experience deficiency, in accordance with the PBA.
- The Company caused its actuary to file an actuarial valuation report in connection with the Plan with a valuation date of March 1, 2007 (the “2007 Actuarial Report”) in January of 2008. The 2007 Actuarial Report showed there were unpaid employer contributions including interest, that are due as of March 1, 2007 to the pension fund for the Plan in the sum of $732,690 and the transfer ratio of the Plan as of March 1, 2007 had declined to .815 from .900 as of March 1, 2004.
- The 2007 Actuarial Report indicates that the employer is required to make the following payments in order to make the Plan solvent:
a) a one time payment for contribution arrears of $733,609
b) special payments of $520,267 payable monthly at $9,678 per month starting March 1, 2007 and ending February 28, 2012
c) normal cost payments of $71,480 per year.
- The members of the Plan are represented by the National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) (the “Union”).
- Both the Company and the Union have confirmed that they continue to operate under a Collective Agreement made between Northrop Grumman – Canada Ltd. and the Union, Local 504 which expired on April 22, 2005 (the “Collective Agreement”).
- The Union has advised the Financial Services Commission of Ontario (“FSCO”) that the Plan is a contractual term and condition of employment and it forms an integral part of the Collective Agreement. The Collective Agreement is silent with respect to the Plan, except for a reference to Product Relocation or a Plant Closedown, in Letter 16 which is attached to the Collective Agreement. The Letters of Understanding attached to the Collective Agreement, including Letter 16 do not form part of the Collective Agreement and are not subject to the grievance and arbitration provisions.
- The Union has confirmed that it met with the Company in December of 2007 and asked the Company to consider an early retirement incentive offer. The Union has advised that a premature wind up will preclude this possibility. The effect of such negotiations would be to increase the liabilities of the Plan and negatively impact the funded status of the Plan, rather than to assist in improving the funded status of the Plan.
- Section 55(2) of the PBA states that an employer who is required to make contributions to a pension plan shall make the contributions in accordance with the prescribed requirements for funding and in the prescribed manner, to the pension fund.
- Section 4(4) of the Regulation states that employer contributions to a pension plan shall be made in monthly instalments within 30 days after the month for which the contributions are payable.
- Section 69(1)(b) of the PBA states that the Superintendent of Financial Services may require the wind up of a pension plan if the employer fails to make contributions to the pension fund as required by the PBA or the Regulation.
- The Company has failed to make the employer contributions to the pension fund of the Plan as required by the PBA and Regulation and continues to fail to do so.
- 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
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.
DATED at Toronto, Ontario, this 3rd day of March, 2008.
K. David Gordon
Deputy Superintendent, Pensions
5300 Commerce Court West,
199 Bay Street,
Toronto ON M5L 1B9
Counsel for Wescan Systems Limited
205 Placer Court
Toronto, ON M2H 3H9
Attention: Tony Wohlfarth, National Representative
Pension & Benefits Department
* 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.