Canada: Plan Mergers After The ING Case

Last Updated: March 15 2005

Article by Blakes Pension & Employee Benefits Group, ©2005 Blake, Cassels & Graydon LLP

This article was originally published in Blakes Bulletin on Pensions - February 2005

A recent Ontario Divisional Court decision suggests that some plan mergers are permissible and can be distinguished from the Aegon Canada Inc. v. ING Canada Inc. case.

Baxter v. Ontario Superintendent of Financial Services

In 2000, National Steel Car Limited (NSC) filed an application pursuant to section 81 of the Pension Benefits Act (Ontario) (the PBA) to transfer the assets of its pension plan for salaried employees (the Salaried Plan) to its pension plan for hourly-paid employees (the Hourly Plan). The Salaried Plan had a substantial surplus while the Hourly Plan had an unfunded liability. Following the transfer, the merged plan would still have a surplus and no solvency deficiency.The Salaried Plan contained express provisions granting the employer the right to merge that plan with another.

The Superintendent consented to the transfer and the appellants, representatives of the Salaried Plan, requested a hearing under section 89 of the PBA in order to challenge that decision. The majority of the Financial Services Tribunal (the Tribunal) determined that it did not have jurisdiction to conduct the hearing, however they did go on to consider the merits of the case, in the event that they were wrong in their decision regarding jurisdiction. The Tribunal unanimously rejected the appellants’ argument that the asset transfer did not adequately protect "other benefits" of the members of the Salaried Plan.

Did The Tribunal Have Jurisdiction To Review The Decision Of The Superintendent?

The Ontario Divisional Court (the Court) held that the Tribunal had jurisdiction to hear the appellants’ case. The issue arose out of the wording of s. 89(4) of the PBA, which provides that the Superintendent must give notice to "the applicant" of any refusal to give approval or consent. NSC argued, and the majority of the Tribunal agreed, that this meant that only NSC had the right to contest the Superintendent’s decision at a hearing, as they were the only applicant for approval or consent. The Court rejected this argument stating that both the statutory interpretation and case law supported the conclusion that there was a need for fair process, which included a right of review for both parties.

What Is The Proper Standard Of Review Of The Tribunal’s Decisions?

Quite apart from the question of plan merger, this is one of the most important aspects of the decision in Baxter because it follows the decision of the Supreme Court of Canada in Monsanto Canada Inc. v. Superintendent of Financial Services, on the question of the appropriate standard of review of a decision of the Tribunal. In Baxter, the Court was able to distinguish the statutory provision under consideration (subsection 81(5) of the PBA) and the provision of the PBA considered in the Monsanto case (subsection 70(6)). Using the four criteria in the Pushpanathan v. Canada (Minister of Citizenship and Immigration), the Court concluded:

One. The lack of an express privative clause in the PBA and the existence of a general statutory right of appeal in section 91 of the PBA supports a less deferential standard of review.

Two. In evaluating the expertise of the Tribunal relative to the courts with respect to subsection 81(5), the Court concluded that the provision involves more than a question of pure law, and instead, requires the balancing of "multiple sets of competing constituencies".

Three. The question of whether an asset transfer complies with subsection 81(5) is a question that was "at the heart or core of the Tribunal’s regulatory mandate and expertise and the interpretation of that provision is squarely within the Tribunal’s jurisdiction".

Four. The nature of the problem fell within the specialized administrative expertise of the Tribunal.

In consideration of all of these factors, the Court concluded that the Tribunal’s decision should be accorded some deference and that the appropriate standard of review was reasonableness simpliciter, rather than correctness.

Did The Superintendent/Tribunal Err In Concluding That The Transfer Complied With

S. 81(5) Of The PBA?

The appellants argued that the funding protection built into the Salaried Plan constituted "other benefits" under s. 81(5) of the PBA and therefore must be protected before the Superintendent could agree to a transfer of pension assets. They argued that since "ancillary benefits" is defined not to include surplus or assets of the pension plan, the term "other benefits" must be given a broader reading. Otherwise the Legislature would have used the narrower term "ancillary". They also argued that the Superintendent had a duty to consider the possibility of surplus dilution resulting from the merger.

The Court, instead, agreed with the respondents and held that the term "other benefits" meant benefits provided by a pension plan that are not pension benefits or ancillary benefits, such as disability benefits or income replacement benefits. "Other benefits" does not include actuarial surplus, because if it did, an employer would be prohibited from taking any step that would dilute actuarial surplus, including taking contribution holidays and adding new members. This result would be contrary to both the PBA and its regulations.

The Court distinguished this case from Aegon Canada Inc. v. ING Canada Inc. noting that the appellants failed to establish that the Salaried Plan was the subject of a trust and, even if there was a trust, the appellants did not establish that the terms of any such trust precluded the merger.

The Court also concluded that the decision to uphold the validity of the merger could be reconciled with the decision of the British Columbia Court of Appeal in Buschau v. Rogers Cable Systems Inc. The Court noted that in Buschau, the British Columbia Court of Appeal did not hold that the specific terms of the applicable trust precluded a merger, rather in the circumstances of that case, the applicable trust was closed and the beneficiaries sought to obtain distribution of the trust funds under the rule of Saunders v. Vautier with the result that the beneficiaries were entitled to segregation and an accounting of the assets in which they had established their beneficial entitlement. In effect, in the Buschau case, the merger proceeded, subject to segregation and accounting.

Hopefully, the NSC decision will cause the Financial Services Commission to broaden the permissible transfers and mergers.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

3 Nov 2016, Other, Vancouver, Canada

“Risk” is the new black. It’s on the lips of every CEO, CFO, GC and board member — as it should be. Can you spot it? How do you analyze it? Are you equipped to manage it?

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.