DANIEL LAFLOR / IS TOCKPHOTO. COM
Retirees and pension reform
Pensioners lobby for greater involvement in plan governance
Historically, employees who
retired with an employer-spon-sored defined benefit pension
could expect to be somewhat
insulated from their employers’
future economic issues. But that
changed with the extraordinary
economic conditions that
recently threatened even pension plans that the Ontario government had agreed were too
big to fail.
Federal and provincial governments throughout Canada
accelerated pension reform
initiatives and retirees organized in order to participate in
pension reform consultations.
Reports from expert commissions have been released and
governments are rolling out the
first phase of pension reform.
But are retirees likely to be
satisfied with changes?
After four years of consultation and analysis, the Ontario
government has passed the
Pension Plan Amendment Act, 2010
(Bill 236) which amends the
Ontario Pension Benefits Act
(PBA) and is the first phase of
the most significant pension
reform in 20 years. Bill 236
received royal assent on May 18.
Many substantive changes
become effective on a date to be
proclaimed by the Lieutenant
Governor, and some amendments are subject to regulations
KAREN
SHAVER
containing prescribed details,
yet to be released.
Subject to these prescribed
details, what did retirees achieve
under Bill 236 and what do they
still want? Have pensioners
become activists as a result of
their participation in pension
reform process, and are plan
administrators now obliged to
consult with and balance pensioners’ views in areas of plan
governance and administration?
Retiree involvement
in consultations
Bill 236 proposes amendments to the PBA based on recommendations of the Ontario
Expert Commission on Pensions
following extensive consultations with stakeholders, including pensioner groups. Retirees
also participated in consultations conducted by the Standing
Committee on Finance and Economic Affairs before Bill 236
received royal assent. Retirees
made more than 25 submissions
about their issues and concerns
related to pension reform, some
of which are discussed below.
Recognition of retirees
Retirees resent being
described in the PBA and their
own plan documents as “former
members.” Bill 236 amends the
PBA to define “retired members”
separately from “former” members, with separate rights and
entitlement to disclosure of certain plan-related information.
Some groups perceive this
renaming as less than adequate
in delivering the real changes
that pensioners are seeking in
being involved in the administration of their pension plans.
Advance notice
of plan amendments
Retirees do not have effective
access to plan information. Bill
236 amends the PBA to require
that plan administrators provide
retirees with increased disclosure about plan operations and
funding and with advance notice
of all amendments to the pension plan, unless exempted
under the regulations. Timing
and substance of the required
information will be described by
the regulations.
Participation in pension
advisory committees
Retirees generally have no
right to participate in plan gov-
ernance decisions, even those
that might adversely affect their
pensions. Former union mem-
bers, as retirees, have no voice in
pension plan affairs, and, in
most unions, no role in union
decision-making.
Future retiree involvement
While Bill 236 addresses
some obvious limitations in the
PBA for retirees, subject to the
regulation to be released, a
number of retiree concerns
have not been addressed. And
while Bill 236 attempts to bal-
ance priorities between broad
groups of stakeholders, includ-
ing retirees, pensioner group
submissions clearly indicate
that retirees do not speak with
one voice. It will be a challenge
to develop pension policy that
is broad enough to shape future
pension reform that incorpor-
ates the variety of issues.
Karen Shaver is a partner in
the Pensions and Employee Com-
pensation Group of McMillan
LLP in Toronto. Her clients
include employer plan sponsors,
boards of trustees, private equity
investors, creditors and borrowers
and trustees in bankruptcy.
