Originally published in Blakes Bulletin on Pension
& Employee Benefits, April, 2008
On April 2, 2008, the Court of Appeal rendered an important
decision in Sean Kelly et al. v. Régie des rentes du
Québec et al. The Court quashed the decisions
rendered by the Superior Court, the Administrative Tribunal of
Quebec and the Review Board of the Régie des rentes du
Québec to the effect that it was not possible to offer
benefits contingent on their funding under a multi-employer
In this case, the relevant provisions of the plan provided
that past service credits were granted under condition that
they be fully funded and that, if an employer withdrew from the
plan, the benefits payable in respect of that
employer's employees would be reduced to conform to the
available funding. The lower court and other decisions found
that the wording of sections 211 and 228 of the
Supplemental Pension Plans Act did not allow benefits
to be reduced, even in the context of a multi-employer pension
plan established pursuant to an arrangement under which the
obligation of the employer was limited to a fixed amount set
out in a collective agreement or trust agreement. The effect of
the lower level decisions could have therefore resulted in
other plan members and participating employers subsidizing
benefits payable to employees of withdrawing employers.
The Court of Appeal has overturned those decisions.
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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