British Columbia Law Institute Seeks Comments on New and Emerging Issues for Update to Pension Division Question and Answer Materials

The British Columbia Law Institute published the first edition of its book Questions and Answers About Pension Division on the Breakdown of a Relationship in British Columba in 1996.The third edition was published in 2013, and is available here.

The British Columbia Law Institute is now seeking input for the fourth edition. I will quote the press release:

The law on pension division is rapidly evolving. BCLI is working to keep pace with it by developing the fourth edition of its popular Questions and Answers on Pension Division at the Breakdown of a Relationship resource.

Do you have a question about the new Pension Benefits Standards Act or its interaction with the Family Law Act?

Do you have comments about a particular area of the law you would like to see explained in more detail in the 2016 update?

This new update will examine the upcoming changes to pension benefits standards in the new Pension Benefits Standards Act, explore the effects of ancillary provisions in the Family Law Act, as well as review developments in the common law since its last publication in March 2013. This will be the fourth edition of the Q & A materials – an ongoing project dating back to March 1996.

Thomas G. Anderson, QC, a specialist in pension law, particularly dealing with dividing entitlement when a relationship ends, is once again working closely with the BCLI to perform this update. He noted, “In my view, this is an extremely valuable project.  When a relationship ends, often the most valuable assets the parties possess are their retirement benefits.  It's important for the Q & A materials to continue to serve as an up-to-date practice resource for the BC legal community, other professionals involved in pensions and benefits, and members of the general public.”

The final publication is expected to be available at www.bcli.org in Spring 2016.

BCLI is currently receiving submissions, questions, and comments about suggested updates for the fourth edition of the Q & A materials. BCLI is accepting submissions at pensiondivision@bcli.org until 30 October 2015.

The British Columbia Law Institute strives to be a leader in law reform by carrying out the best in scholarly law-reform research and writing and the best in outreach relating to law reform.


Contact: Alexandre Blondin
Research Lawyer
(604) 822 0981
ablondin@bcli.org

Government of Canada Plans to Increase the Age of Eligibility for Old Age Security and the Guaranteed Income Supplement to 67 in 2023

In the Federal Budget released today, the Harper Government announced that it will raise the age when seniors will be entitled to the Old Age Security Benefits and the Guaranteed Income Supplement to from 65 to 67. This will not take effect immediately and will be phased in.

As set out in Chapter 4 of the 2012 Federal Budget::

The Old Age Security (OAS) program is financed from the Government of Canada’s general revenues and provides a monthly pension to most Canadians 65 years of age or over. The maximum annual OAS pension is $6,481.

The Government provides additional support to low-income seniors through the Guaranteed Income Supplement (GIS). The maximum annual GIS benefit is $8,788 for single seniors and $11,654 for couples. 

The OAS program provides approximately $38 billion per year in benefits to 4.9 million individuals.

The changes are as follows:

Economic Action Plan 2012 introduces changes to the age of eligibility for OAS benefits, to be phased in gradually, starting in 2023. As well, Economic Action Plan 2012 introduces the option to defer the OAS pension and receive an actuarially adjusted pension, starting on July 1, 2013.

The age of eligibility for OAS and GIS will be gradually increased from 65 to 67, starting in April 2023, with full implementation by January 2029. An 11-year notification period, followed by a 6-year phase-in period, is being provided to ensure that individuals have significant advance notification to plan their retirement and make adjustments.

This proposed legislative change to the age of OAS/GIS eligibility will not affect anyone who is 54 years of age or older as of March 31, 2012. Thus, individuals who were born on March 31, 1958 or earlier will not be affected. Those who were born on or after February 1, 1962 will have an age of eligibility of 67. Those who were born between April 1, 1958 and January 31, 1962 will have an age of eligibility between 65 and 67. For example, as shown in Table 4.2, someone born in April 1960 will be eligible for OAS/GIS at age 66 and one month.

For many, the change will mean working until an older age. But how will this change affect those who are receiving disability benefits under plans that end at age 65? Will this affect private and public disability plans? Will it lead to higher costs for disability insurance?

Changes to Power of Attorney Act Will Provide Limited Power to Appoint Beneficiaries

Changes to the British Columbia Power of Attorney Act that come into effect on September 1, 2011, will clarify the authority of an attorney appointed under an enduring power of attorney to designate beneficiaries for the person for whom the attorney is acting.

If the person who made the enduring power of attorney becomes incapable of making his or her own decisions, the attorney may manage the incapacitated person’s affairs. The attorney may contemplate making or changing a beneficiary of a pension plan, Registered Retirement Savings Plan, Tax Free Savings Account, or insurance policy.Can the attorney do so?

Section 20 of the Power of Attorney Act will provide a limited power for an attorney under a power of attorney to make a beneficiary designation. Section 20 (5) provides:

(5) An attorney may, in an instrument other than a will,

(a) change a beneficiary designation made by the adult, if the court authorizes the change, or

(b) create a new beneficiary designation, if the designation is made in
(i) an instrument that is renewing, replacing or converting a similar instrument made by the adult, while capable, and the newly designated beneficiary is the same beneficiary that was designated in the similar instrument, or
(ii) a new instrument that is not renewing, replacing or converting a similar instrument made by the adult, while capable, and the newly designated beneficiary is the adult's estate.

I stress the limited nature of the power. Essentially, this provision allows an attorney to maintain the same beneficiaries as those appointed by the person for whom the attorney is acting. For example, if the person who appointed the attorney had a Registered Retirement Savings Plan with a designated beneficiary, and the attorney transfers the funds to a different plan, the attorney may designate the same beneficiary. But if the attorney wishes to change the beneficiary, he or she must first apply for authorization from the Supreme Court of British Columbia.

If there is no named beneficiary, then the attorney may designate the estate of the person for whom the attorney is acting, in which case the asset will ultimately be distributed to the beneficiaries of that person's will.

The Power of Attorney Act will also contain an express provision in section 21 that the attorney may not make or change a will on behalf of the person for whom he or she is acting.

Supreme Court of Canada Dismisses Withler Appeal

In a decision released on March 4, 2011, the Supreme Court of Canada upheld the constitutionality of provisions in both the Public Service Superannuation Act, and the Canadian Forces Superannuation Act that reduced the amount of a supplementary death benefit paid to the spouse of a deceased member after the member reached a certain age. The case is Withler v. Canada (Attorney General), 2011 SCC 12.

I described this case in my post on the British Columbia Court of Appeal decision as follows:

Both pension plans provide members with group life insurance, but the amount payable on the death of a member is reduced after a certain age. The death benefits payable under the Public Service plan equals twice the annual salary of a member who dies before the age of 66. If the member dies after the age of 66 the death benefit is lower. Beginning at the 66, the payment is reduced by 10% a year. The Canadian Services plan is similar except that the payouts are reduced at the age of 61.

A class action lawsuit was brought on behalf of spouses and partners of deceased members who received a reduced benefit. They argued that the legislation violates section 15(1) of the Canadian Charter of Rights and Freedoms, which says:

15.(1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

The trial judge, Madam Justice Garson, held that these provisions of the pension plans did not violate section 15(1), and dismissed the claims. The majority of the Court of Appeal agreed with the trial judge.

The Supreme Court of Canada dismissed the plaintiffs' appeal of the Court of Appeal decision. Although on its face, the lower death benefits on the death of older members creates a distinction on the basis of age, viewed in the overall context of the pension scheme, the Court held that they did not offend the Charter protection of substantive equality.

Chief Justice McLachlin, and Madam Justice Abella, stressed the importance of considering the context of the plan:

[71] In approaching this question, it is useful to identify at the outset the relevant contextual factors. As discussed above, a central consideration is the purpose of the impugned provision in the context of the broader pension scheme. It is in the nature of a pension benefit scheme that it is designed to benefit a number of groups in different circumstances and with different interests. The question is whether the lines drawn are generally appropriate, having regard to the circumstances of the groups impacted and the objects of the scheme. Perfect correspondence is not required. Allocation of resources and legislative policy goals may be matters to consider. The question is whether, having regard to these and any other relevant factors, the distinction the law makes between the claimant group and others discriminates by perpetuating disadvantage or prejudice to the claimant group, or by stereotyping the group.

The Supreme Court of Canada agreed with the trial judge’s analysis of the plan. In the cases of the death of younger members, the death benefit provided a limited income stream to their spouses and partners on the unexpected death of the members. The surviving spouses and partners of deceased younger members would not usually have the protection of a pension.

On the death of older members, their spouses and partners receive survivor’s pension benefits and health and dental care benefits under other provisions of the pension plans. These benefits provide a stream of income to the spouses and partners. The supplementary death benefits have a more limited function of assisting with last illness and death expenses when older members die.

The Supreme Court of Canada held that the distinctions based on age in the pension scheme as a whole corresponded with the needs of the claimants, although the correspondence was not perfect. Accordingly, the reduced death benefits based on age did not violate section 15 of the Charter.

MacMichael v. Strocel

What happens if on a marriage breakdown the husband promises his former wife that if he dies before her, she will receive his pension benefits, but on his death the pension plan requires that the benefits be paid to his second wife?

The Supreme Court of British Columbia considered this issue in MacMichael v. Strocel, 2009 BCSC 290.

On the breakdown of his marriage to Fern MacMichael, James MacMichael agreed in their separation agreement, dated September 24, 1971, that in his will he would leave her any death benefit payable to his estate and all pension benefits.

He remarried in 1973.

In August of 2000, James MacMichael signed a new will in which he left Fern MacMichael $2500, any lump sum death benefit payable from his Federal Pension Plan and the Canada Pension Plan, and one-eight of the residue of his estate.

When he died on April 15, 2006, the survivors benefits under his pension plan were payable to his widow, Marie MacMichael. This is a requirement of the Public Service Superannuation Act, which governs the pension plan.

Fern MacMichael sued the executor of James MacMichael’s will for damages against the estate for breach of the separation agreement. She also sued Marie MacMichael for the survivorship pension benefits.

The executor of James MacMichael’s will acknowledged that the deceased had breached the separation agreement, but there were insufficient assets in his estate to fully compensate Fern MacMichael for the value of the survivors’ pension benefits.

Fern MacMichael asked the court to declare that James MacMichael held the survivors’ benefits in trust for her. She argued that the separation agreement created a trust, or alternatively that allowing Marie MacMichael to keep the benefits would unjustly enrich her.

Madam Justice Stromberg-Stein ruled that the widow was entitled to keep the survivors’ benefits. The separation agreement did not contain wording that would create an express trust for the benefits.

The Court also rejected the argument that the widow was unjustly enriched. To establish unjust enrichment, Fern MacMichael would need to establish three things:

that Marie MacMichael was enriched;
that Fern MacMichael suffered a deprivation; and
that there was no juristic reason for the enrichment.

In this case there is a juristic reason for the enrichment, namely the provision of the legislation governing the pension plan. Depriving James MacMichael’s widow of the survivors’ benefits to which she was entitled to under the pension plan would be unfair and unjust to her. Accordingly, it would be inappropriate for the court to impose a constructive trust on the benefits in favour of Fern MacMichael.

Madam Justice Stromberg-Stein granted a judgment for $48,000 against James MacMichael’s estate, but dismissed the claim against Marie MacMichael.

It should be noted that there have been significant changes in the laws in British Columbia relating to the division of pension plans on the marriage breakdown since the 1970s, when James and Fern MacMichael separated. These changes offer better protection to former spouses of pension plan members, but the law is complex. If you are going through a marriage breakdown, and you or your spouse in a member of a pension plan, you would be well advised to consult with a family-law lawyer with experience in dealing with pension plan divisions.

Withler v. Canada (Attorney General)

The British Columbia Court of Appeal upheld provisions of federal pension plans providing reduced death benefits payable on the death of older members of the plans.

In a decision released yesterday, Withler v. Canada (Attorney General), 2008 BCCA 539, the Court of Appeal considered the constitutionality of supplementary benefits under Public Service Superannuation Act, and the Canadian Forces Superannuation Act.

Both pension plans provide members with group life insurance, but the amount payable on the death of a member is reduced after a certain age. The death benefits payable under the Public Service plan equals twice the annual salary of a member who dies before the age of 66. If the member dies after the age of 66, the death benefit is lower. Beginning at the 66, the payment is reduced by 10% a year. The Canadian Services plan is similar except that the payouts are reduced beginning at the age of 61.

A class action lawsuit was brought on behalf of spouses and partners of deceased members who received a reduced benefit. They argued that the legislation violates section 15(1) of the Canadian Charter of Rights and Freedoms, which says:

15.(1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

At trial, Madam Justice Garson held that these provisions of the pension plans did not violate section 15(1), and dismissed the claims.

The plaintiffs appealed to the British Columbia Court of Appeal. Madam Justice Ryan, writing for herself and Madam Justice Newbury agreed with the trial judge, and upheld the legislation. Madam Justice Rowles dissented, and would have declared the relevant provisions unconstitutional.

The majority judgment considered the benefits in the context of the overall pension scheme. Although the spouses of seniors received lower death benefits based on the members’ age, they received survivor pensions and other benefits not available to the spouses of younger members. Madam Justice Ryan wrote at paragraph 181:

[181] This case demonstrates the difficulty that arises when one attempts to isolate for criticism a single aspect of a comprehensive insurance and pension package designed to benefit an employee’s different needs over the course of his or her working life. The trial judge concluded that, viewed in context, the supplemental death benefit was the part of a larger scheme comprised of group insurance and pensions designed to look after the changing needs of an employee as he or she remained in the workforce and then retired. At the younger ages, the supplementary death benefit provided a limited stream of income for unexpected death where the surviving spouse is not protected by a pension. At older ages, the purpose of the supplementary death benefit is for expenses associated with last illness and death. The comprehensive plan, while not a perfect fit for each individual, did not meet the hallmarks of discrimination given that it was a broad-based scheme meant to cover the competing interests of the various age groups covered by the plan.

[Since I first published this post, the Supreme Court of Canada dismissed an appeal of this decision. See my post on the Supreme Court of Canada decision here.]

Report on Alberta and British Columbia Pension Standards

The Joint Expert Panel on Pension Standards appointed by the Alberta and British Columbia governments released its report last Friday, November 28, 2008. The report includes recommendations for reforming and harmonizing pension standards legislation in both provinces.

You can forward comments to Alberta Finance and Enterprise, and the British Columbia Ministry of Finance on the recommendations until March 2, 2009. The contact information for making comments is here.

Flack v. Rossi

In a recent decision, Flack v. Rossi, 2008 BCSC 670, two children challenged their late father’s designation of their cousin as the beneficiary of his pension plan.

Assunta Caputo and Carmen Caputo alleged that their father, Cosmo Caputo, did not sign the designation. They also alleged that he was bound by an agreement with their mother when they separated to make them the irrevocable beneficiaries of his pension plan. Thirdly, they alleged that their cousin, Nevio Rossi, unduly influenced their father to designate him as the beneficiary.

Mr. Justice Parrett upheld the designation.

The court found that Cosmo Caputo did sign the form designating Mr. Rossi as the beneficiary. The children had a handwriting analyst testify that the signature on the form differed from other handwriting samples of Cosmo Caputo. But, although the court accepted the analyst’s report as an expert report, the court did not give it much weight in light of the inexperience of the analyst, and his admission that the difference in writing could be attributable to other factor’s such as age, disease, physical changes, the size of space, and being rushed or writing slowly. Mr. Justice Parrett accepted the evidence of the witness to Mr. Rossi’s signature that Mr. Rossi signed the form.

Mr. Justice Parrett also rejected the argument that Cosmo Caputo agreed with his former wife to name their children as the irrevocable beneficiaries of his pension. The allegation was inconsistent with the terms of the written separation agreement, in which the wife gave up a claim to the pension in consideration of receiving the matrimonial home. The written agreement purported to be the entire agreement, and specifically revoked any previous agreements.

The children were no more successful in their allegation that Mr. Rossi had unduly influenced their father. Mr. Justice Parrett held that the onus was on the children to prove undue influence. In this respect a pension designation is treated similarly with a will: there is no presumption of undue influence even if the beneficiary is in a position to dominate the person making the designation. This stands in contrast to other gifts made during the donor’s lifetime, in which case there can be a presumption of undue influence.

Mr. Justice Parrett found no evidence that Mr. Rossi unduly influenced Cosmo Caputo. Although he assisted Cosmo Caputo from time to time, other people also provided assistance. There was evidence that when he changed the designation, he was unhappy with his children.

The court dismissed the children’s claims.

Canada (Attorney General) v. Hislop

The Supreme Court of Canada released its decision today in a class action suit brought on behalf of same-sex partners who were denied Canada Pension Plan survivor’s benefits because their partners died before January 1, 1998, and on behalf of same-sex partners who were not eligible for benefits in respect of any time before July 2000. The case is called, Canada (Attorney General) v. Hislop, 2007 SCC 10.

The Canada Pension Plan now provides for benefits to surviving married spouses and surviving common-law partners of deceased person who were contributors to the Canada Pension Plan. The definition of common-law partners includes opposite and same-sex partners who lived in a conjugal relationship. Accordingly, a surviving same-sex partner of a deceased contributor may receive Canada Pension Plan survivorship benefits.

But, it was not always so.

The federal government amended the Canada Pension Plan, RSC 1985, c. C-8, to include same-sex partners effective July 2000. The amendments contained some restrictions. The new provisions allowing survivorship benefits to same-sex partners did not apply if the Canada Pension Plan contributor died before January 1, 1998. If the contributor died on December 31, 1997, the contributor’s same-sex partner would not be entitled to any survivorship benefits.

Furthermore, those same-sex partners who were eligible to receive survivorship benefits could only receive benefits from July 2000. If the contributor died in November 1999, the surviving same-sex partner was not eligible for the benefits in respect of the period from November 1999 through June 2000.

The Canada Pension Plan also provides that a surviving spouse or common-law partner (whether same-sex or opposite-sex) may only receive benefits in respect of a period of up to one year before he or she applies for the benefits. For example, if your spouse died in January 2002, and you applied for benefits in April 2003, you would be entitled to the arrears of benefits from April 2002, but not for January, February or March 2002.

George Hislop, Brent Daum, Albert McNutt, Eric Brogaard and Gail Meredith as representative plaintiffs challenged the restrictions in the legislation. They argued that by limiting the rights of same-sex survivors, the federal government violated section 15 (1) of the Charter of Rights and Freedoms. Section 15 (1) says,

15. (1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

The representative plaintiffs advanced arguments on four main issues as follows:

1. The legislation discriminated against anyone whose same-sex partner died before January 1, 1998. In contrast, the opposite-sex partner of a deceased contributor who died before January 1, 1998 is eligible for survivorship benefits.

2. Similarly, by disallowing benefits for the period before July 2000, the legislation discriminated against same-sex partners, who were not treated equally to opposite-sex partners in similar circumstances.

3. Because the legislation allowing same-sex partners to receive survivorship benefits did not come into effect until July 2000, the provision limiting payments in respect of benefits for up to one year before the survivor applies has a discriminatory effect. The representative plaintiffs argued it should be suspended in some cases. This would allow those who were not eligible to apply to receive the benefits they could have received if the legislation had been changed when section 15 of the Charter came into effect on April 17, 1985.

4. The estates of those same-sex partners who would have been entitled to survivorship benefits if the legislation had been amended earlier should receive the survivorship benefits.

The Supreme Court of Canada held that the provision excluding the surviving same-sex partners of contributors who died before January 1, 1998, violated section 15 of the Charter. The court struck out the provision. Those surviving same-sex partners of contributors who died from April 17, 1985 to December 31, 1997, may now receive Canada Pension Plan survivorship benefits.

The Court also held that the provision disallowing benefits to same-sex partners for the period before July 2000 was unconstitutional.

On the other hand, the Supreme Court of Canada did not suspend the 12-month restriction on arrears of benefits. The Court dealt with this question as an issue of remedy, rather than one of rights. In deference to Parliament, which had acted in good faith, the court declined to award benefits for any period exceeding 12 months prior to an application for benefits. The effect of this is that the Canada Pension Plan will not be required to pay survivorship benefits to same-sex partners in respect of any period before July 1999 (one year before the amendments came into effect).

The Supreme Court of Canada also refused to make any award to the estates of those same-sex partners who died before the date arguments were concluded in the Ontario Superior Court.

As an estate lawyer, I find this part of the judgment especially interesting. Mr. Justice LeBel and Mr. Justice Rothstein characterize an estate as “just a collection of assets and liabilities of a person who has died. It is not an individual and it has no dignity that may be infringed.” With respect to section 15 of the Charter, “The use of the term ‘individual’ in s. 15 (1) was intentional. For these reasons, we conclude that estates do not have standing to commence s. 15(1) Charter claims. In this sense, it may be said that s. 15 rights die with the individual.”

Sadly, one of the representative plaintiffs, Mr. Hislop, died before this judgment. Because he was alive on the day final arguments were made in the Ontario Court of Justice, his estate will be eligible for the benefits he fought for.

The Rule in Saunders v. Vautier and Pension Plans

I have never thought of law as a bunch of isolated rules. It is more of a web. Principles articulated in one context may be applicable in another. Sometimes a rule developed in one situation can be applied in a very different situation, but sometimes the rule doesn’t quite fit.

I wrote a post here about the rule in Saunders v. Vautier, which in British Columbia allows all of the beneficiaries of a trust to terminate the trust and require the trustee to distribute the trust fund to the beneficiaries, provided that all of the beneficiaries including contingent beneficiaries are adults with legal capacity. This is a rule that was developed, and is usually applied, in the context of personal and family trusts. For example, if in my will I say that my estate is to be held in trust for my children until the youngest has reached the age of 45--and there are no gifts to others if a child dies before 45--after my death they can terminate the trust upon the youngest attaining the age of 19 (the age of majority in British Columbia).

What if, instead of a modest family trust for children, we apply the rule in Sanders v. Vautier to a trust set up to hold the assets of a pension fund for the benefit of the employees of a large corporation? The employer made all of the contributions, and in addition to the funds required to pay the retired employees their pension benefits, the fund now has a significant surplus. Can the pension plan members get together to terminate the trust, and demand that the trustee distribute the trust funds to them?

This is one of the questions that the courts have considered in litigation that has been ongoing for ten years between Rogers Communications Incorporated, and 112 members of one of its pension plans. Rogers acquired the plan when they took over another company. The plan has had surplus funds, and Rogers has not made contributions to the plan in many years. In 1984, the plan was closed to future employees. By 2002, the plan had a surplus at about $11 million. A trustee appointed under a trust set up pursuant to the pension plan held these funds.

The pension plan members asked the courts to terminate the trust and get the trustee to distribute the funds to them.

The British Columbia Court of Appeal, in Buschau v. Rogers Communications Inc. (No. 3), 2004 BCCA 282, held that the rule in Saunders v. Vautier applied. The pension plan members could terminate the trust, as long as every beneficiary consented, including those, such as members’ spouses, who would be entitled to survivor benefits under the pension plan on the death of the members. But the Court of Appeal also held that the Trust and Settlement Variation Act, RSBC 1996, c. 463, did not authorize the court to consent to the termination of the trust on behalf of adult beneficiaries who could not be located. Accordingly, the members had to locate and get every beneficiary to agree.

The Supreme Court of Canada in Buschau v. Rogers Communications Inc., 2006 SCC 28, overruled the B.C. Court of Appeal’s decision that the court could apply the rule in Saunders v. Vautier to terminate the trust set up pursuant to this pension plan. The Supreme Court of Canada said that the trust could not be considered in isolation; but that the courts had to look at the trust in the context of the contractual framework of the pension plan agreements, the regulatory framework of pension legislation, and the broad social and economic goals pensions are designed to implement.

Deschamps J. writing the majority judgment said at paragraphs 27 – 32:

27 There are many reasons why the rule is not easily incorporated into the context of employment pension plans.

28 First, pension plans are heavily regulated. The P.B.S.A. [Pension Benefits Standards Act, 1985] regulates the termination of a plan and the distribution of the fund and the trust assets. I accept the following comment of the Court of Appeal (Buschau #2, at para. 47):

It must be acknowledged that the application of the rule in Saunders v. Vautier to pension trusts does involve different and more complicated factors, financial and legal, than an ordinary legacy or gift in trust. As already noted, pension trusts are part of the complex of rights and obligations (not only equitable, but also contractual and statutory) between employers and employees, and obviously serve broad societal and economic purposes.

However, the Court of Appeal’s order (Buschau #3) defies the application of the P.B.S.A. because it allows for the operation of the rule in Saunders v. Vautier without regard to the obligations to report to the Superintendent and to provide for the payment of pension benefits before distribution of the trust fund. The P.B.S.A. deals extensively with the termination of plans and the distribution of assets. It is clear from this explicit legislation that Parliament intended its provisions to displace the common law rule. To the extent that it provides a means to reach the distribution stage, the P.B.S.A. prevails over the traditional rule in Saunders v. Vautier.

29 Second, a family or testamentary trust is generally a stand-alone instrument. It does not usually depend on any other instrument for its operation. No indirect effect results from the application of the rule in Saunders v. Vautier in such cases. In contrast, a pension trust serves only as a vehicle for holding and managing the funds required by the pension plan. In the instant case, the Trust agreement is expressly “made a part of the Plan” (art. I(1)) and the Plan is attached to that agreement (preamble to the Trust agreement). The Trust agreement is therefore dependent on the Plan for which it was created. The Premier Trust cannot be collapsed without regard to the Plan itself. The two instruments are therefore indissociable. This particular situation was not dealt with in Schmidt, which focussed on the distribution of trust assets, not the termination of a trust agreement that had been expressly made part of a Plan. In the case at bar, despite the link between the Plan and the Trust agreement, the judgment of the Court of Appeal purports to authorize the members to resort to the rule in Saunders v. Vautier, but does not provide for termination of the Plan. And yet, termination of the Plan in accordance with the prevailing P.B.S.A. is a condition precedent to distribution. This awkward juridical status illustrates why the common law rule is not an easy fit in the pension law context.

30 Third, employers establish plans because it is in their interest to do so. Under normal circumstances, they have the right not to have their management decisions disturbed. In contrast, the common law trust allows no room for the settlor’s interest. Although the particular circumstances of this case may lead to the conclusion that the employer no longer has a legitimate interest in the continuation of the Plan, a blanket statement that the employer has no interest conflicts with the usual expectations of parties to a pension plan.

31 Fourth, gift or legacy trusts are gratuitous, and accelerating the date of the beneficiaries’ entitlement has no broad social consequences. Pension trusts funds, however, are no longer generally viewed as being gratuitous: either employees contribute directly or their entitlement is regarded as remuneration deferred until the date of their retirement. The capital of the pension trust fund cannot be distributed without defeating the social purpose of preserving the financial security of employees in their retirement by allowing them to receive periodic payments until they die.

The court did leave open the possiblity that the rule in Saunders v. Vautier might apply to some pension plans.

Rogers won this battle, but I doubt that the war is over.

Deschamps J. also wrote that the pension plan members could apply to the Superintendent of of Financial Institutions to wind up the plan and terminate the trust. The pension plan members might still win, but their claims will have to be considered within the pension plan regulatory framework, rather than under purely trust law principles.

The Supreme Court of Canada did not overrule nor discuss the Court of Appeal’s holding that the Trust and Settlement Variation Act did not give the court jurisdiction to consent to a variation or termination of a trust on behalf of capacitated adult beneficiaries.

Survivor Benefits

Social Development Canada provides a summary on Canada Pension Plan Survivor and Death Benefits. I have posted an extract below:

Survivor Benefits: "Canada Pension Plan Survivor Benefits
1. What are Canada Pension Plan survivor benefits?
Canada Pension Plan survivor benefits are paid to a deceased contributor's estate, surviving spouse or common-law partner and dependent children. There are three types of benefits.
The death benefit is a one-time payment to, or on behalf of, the estate of a deceased Canada Pension Plan contributor;
The survivor's pension is a monthly pension paid to the surviving spouse or common-law partner of a deceased contributor;
The children's benefit is a monthly benefit for dependent children of a deceased contributor.
It is important to apply for Canada Pension Plan benefits. If you do not apply, you may lose benefits you are entitled to receive.
2. How long must I contribute for my survivors to receive benefits?
If your Canada Pension Plan 'contributory period' is longer than nine years, you must have contributed in:
one third of the calendar years in your contributory period, or
10 calendar years, whichever is less.
There is a minimum contributory requirement of at least 3 years."