With the coming into force of the Pooled Registered Pension
Plans Act, S.C. 2012 c.16 (the "PRPPA"), in
December 2012, amendments to the Bankruptcy and Insolvency
Act (the "BIA") and the Companies'
Creditors Arrangement Act (the "CCAA") took
effect to extend existing pension protections to claims made under
pooled registered pension plans. These new protections arise in
bankruptcies (BIA s. 81.5), receiverships (BIA s.
81.6), proposal proceedings (BIA subs. 60(1.5) and
65.13(8)) and CCAA plans (CCAA sub. 6(6)), and
apply to both federally and provincially regulated plans.
Pooled registered pension plans are defined-contribution pension
plans, administered by financial institutions, for employees and
self-employed persons who do not have access to workplace pension
plans. The PRPPA governs pooled registered pension plans
for employees working in federally regulated industries, including,
without limitation, inter-provincial transportation, aviation,
broadcasting and banking, as well as plans of employees or
self-employed working in Yukon, Northwest Territories and
Section 31 of the PRPPA contains deemed trust language for
amounts owing by an employer to a pooled registered pension plan.
Thankfully, the deemed trust does not extend beyond the scope of
the protection now provided to such plans under the BIA
and the CCAA, namely, protection for: (a) employee pension
contributions deducted at source but unremitted; (b) any defined
employer contributions owing to the plan; and (c) amounts owing by
the employer to the plan administrator. Because pooled registered
pension plans are, by definition, defined contribution plans, there
is none of the uncertainty over trust claims for special payment
amounts that can arise with defined benefit plans.
It is expected that a number of provinces will introduce their
own pooled registered pension plan regimes, which will benefit from
the protections now existing in the BIA and CCAA.
As pension plans thereby become available to more and more Canadian
workers, and more employers become indebted to such plans, we can
expect the frequency of super-priority pension claims to rise in
insolvencies and restructurings.
The Aird & Berlis LLP Financial Services Group has a great
deal of experience in acting for both senior and subordinated
lenders with respect to drafting, negotiating and advising on
intercreditor agreements. For more information, please contact any
member of the Financial Services Group. Details can be found on our
Financial Services, Insolvency and Restructuring web page, by
clicking on members.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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