Copyright 2008, Blake, Cassels & Graydon LLP
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 pension plan.
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.
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