The Supreme Court addressed competing claims to surplus remaining in two merged defined benefit pension plans following wind-up, and also considered the employer's entitlement to take contribution holidays from actuarial surplus.
The majority held that entitlement depends first on whether the pension fund is impressed with a trust; if so, equity governs and a power to revoke cannot be implied from a broad amendment clause.
Applying that framework, the Catalytic plan created a continuing trust that prevented the employer from appropriating termination surplus, while the Stearns plan did not create a trust and its surplus reversion provisions were enforceable as a matter of contract.
The Court further held that contribution holidays are permissible where plan wording allows actuarial discretion to take fund assets and other relevant factors into account.
The employer's appeal succeeded only on the contribution holiday issue, while the employees' cross-appeal failed on the Stearns surplus issue.
