High court will hear watershed case on what happens to a pension surplus during a partial windup
The Supreme Court of Canada is going to tackle the watershed Monsanto pension case.
The case, which deals with how a pension surplus should be handled when a group of employees is terminated during a partial windup, has created a stir in pension circles because of the implications it could have on surpluses.
In November 2002, the Ontario Court of Appeal awarded 146 laid-off employees of Monsanto Canada Inc. some portion of the surplus in their pension plan. The employees were seeking $3.1 million of an estimated $19.1 million surplus, or about $21,000 each. The court’s decision angered some pension managers and led to the Ontario government putting a hold on legislative changes that would make it easier for employers to hold onto surpluses.
The Supreme Court of Canada’s decision to hear the case, announced on June 5, has been met with enthusiasm by pension fund managers.
“The Supreme Court’s decision to proceed with a full hearing is important because someone has to decide whether terminated employees have the same pension surplus-sharing rights as regular employees and pensioners,” said Priscilla Healy, chair of the Association of Canadian Pension Management’s advocacy and government relations committee. “The Ontario Court of Appeal’s decision says their rights are different, and this will pit groups of employees and pensioners against each other across the country, putting pension peace in peril.”
Healy also called on the Ontario government to enact legislative changes to protect surpluses from being raided by employees during a partial windup. She said British Columbia, Alberta and Quebec have dealt effectively with the matter.
“We are calling on Ontario to enact remedial legislation similar to B.C., Alberta and Quebec as soon as possible to ensure that the ‘dog-eat-dog’ disease doesn’t threaten their employees and their pensioners.”
The ACPM joined the legal battle, siding with Monsanto, in an effort to get the Supreme Court of Canada to hear the case. The ACPM argued that a surplus should be retained in the plan on the basis of equity among plan members, including those in the terminated group of employees.
“Members remaining in the plan, including pensioners, can be seriously prejudiced where plans that were in surplus at the time of a partial windup several years ago are in a deficit position today,” said Healy.
Monsanto is a global company, headquarted in St. Louis, that manufactures agricultural products and provides integrated solutions for farmers. It has Canadian offices in Winnipeg and Guelph, Ont.
The case, which deals with how a pension surplus should be handled when a group of employees is terminated during a partial windup, has created a stir in pension circles because of the implications it could have on surpluses.
In November 2002, the Ontario Court of Appeal awarded 146 laid-off employees of Monsanto Canada Inc. some portion of the surplus in their pension plan. The employees were seeking $3.1 million of an estimated $19.1 million surplus, or about $21,000 each. The court’s decision angered some pension managers and led to the Ontario government putting a hold on legislative changes that would make it easier for employers to hold onto surpluses.
The Supreme Court of Canada’s decision to hear the case, announced on June 5, has been met with enthusiasm by pension fund managers.
“The Supreme Court’s decision to proceed with a full hearing is important because someone has to decide whether terminated employees have the same pension surplus-sharing rights as regular employees and pensioners,” said Priscilla Healy, chair of the Association of Canadian Pension Management’s advocacy and government relations committee. “The Ontario Court of Appeal’s decision says their rights are different, and this will pit groups of employees and pensioners against each other across the country, putting pension peace in peril.”
Healy also called on the Ontario government to enact legislative changes to protect surpluses from being raided by employees during a partial windup. She said British Columbia, Alberta and Quebec have dealt effectively with the matter.
“We are calling on Ontario to enact remedial legislation similar to B.C., Alberta and Quebec as soon as possible to ensure that the ‘dog-eat-dog’ disease doesn’t threaten their employees and their pensioners.”
The ACPM joined the legal battle, siding with Monsanto, in an effort to get the Supreme Court of Canada to hear the case. The ACPM argued that a surplus should be retained in the plan on the basis of equity among plan members, including those in the terminated group of employees.
“Members remaining in the plan, including pensioners, can be seriously prejudiced where plans that were in surplus at the time of a partial windup several years ago are in a deficit position today,” said Healy.
Monsanto is a global company, headquarted in St. Louis, that manufactures agricultural products and provides integrated solutions for farmers. It has Canadian offices in Winnipeg and Guelph, Ont.
