FINANCIAL SERVICES TRIBUNAL
2000 ONFST 12
Decision No. P0092-1999-1
IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended by the Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28 (the “Act”);
AND IN THE MATTER OF a Partial Plan Wind-Up Report submitted by BICC Cables Canada Inc. to the Superintendent of Financial Services in respect of the Employees Pension Plan of BICC Phillips Inc., Registration Number 293761 (the “Plan”);
AND IN THE MATTER OF a Hearing in accordance with subsection 89(8) of the Act.
BETWEEN:
BICC CABLES CANADA INC.
Applicant
-and-
SUPERINTENDENT OF FINANCIAL SERVICES
Respondent
BEFORE: C. S. (Kit) Moore, Chair of the Panel and Member of the Tribunal William M. Forbes, Member of the Tribunal Colin H. H. McNairn, Vice Chair of the Tribunal
APPEARANCES: For BICC Cables Canada Inc.: James D. G. Douglas Markus F. Kremer
For the Superintendent of Financial Services: Deborah McPhail
HEARING HELD: October 12, 2000 Toronto, Ontario
REASONS FOR DECISION
The Background
As a result of a plant closure and downsizing, BICC Cables Canada Inc. (“BICC”) (formerly BICC Phillips Inc.) prepared a Partial Wind-Up Report dated June, 1999 (the “Partial Wind-Up Report”) in respect of a partial wind-up as at May 17, 1996 (the “Partial Wind-Up”) of the Employees Pension Plan of BICC Phillips Inc., Registration No. 293761 (the “Plan”) (now called the Employees Pension Plan of BICC Cables Canada Inc.). The Partial Wind-Up Report was filed with the Superintendent pursuant to the provisions of the Act.
On November 10, 1999, the Superintendent of Financial Services (the “Superintendent”) issued a Notice of Proposal to Refuse to Approve the Partial Wind-Up Report (the “Notice of Proposal”) because the Report made no provision for payment of certain special early retirement pensions referred to in section 7.3 of the Plan, for those Plan members affected by the Partial Wind-Up whose age plus years of continuous employment or membership in the Plan totalled at least fifty-five at the effective date of the Partial Wind-Up.
Under the authority of subsection 89(6) of the Act, BICC requested a hearing before the Financial Services Tribunal in respect of the Notice of Proposal. The Tribunal received written submissions from the parties, namely BICC and the Superintendent, and heard their oral arguments at a hearing held October 12, 2000. The Tribunal also received letters of comment from other interested persons.
The Facts
BICC operated the Plan, amending it in 1992 to provide for a “special early retirement pension,” as set out in section 7.3 of the Plan. The text of that section is reproduced below under the heading “The Principal Plan Provision at Issue.”
The Partial Wind-Up Report made no provision for the payment of special early retirement pensions to any of those members of the Plan affected by the Partial Wind-Up nor did it value any such pensions.
On July 19, 1999, the Superintendent authorized the distribution of the assets representing the defined benefit entitlements under the Plan to the members, former members and other persons affected by the Partial Wind-Up in accordance with the Partial Wind-Up Report, “conditional upon additional adjustments to the benefits of affected members and the employer funding the additional cost, should it be determined that the Special Early Retirement Pension benefit must be provided on wind up.”
The Issues
At a pre-hearing conference held on April 17, 2000, the parties agreed on the wording of the substantive issues to be addressed in this proceeding. That wording was included in the pre-hearing conference memorandum as follows:
(1) What is the proper interpretation of section 7.3 of the Plan?
(2) Should this Tribunal direct that the Respondent [the Superintendent] carry out the proposal set out in the Notice of Proposal?
The Principal Plan Provision at Issue
Section 7.3 of the Plan sets out the requirements for determining the special early retirement date and eligibility for a special early retirement pension, as follows:
7.3 Special Early Retirement Date
If the Continuous Service of a Member terminates before normal retirement date under special circumstances as consented by the Company,
(a) the Member will be considered to have retired early for the purposes of the Plan on his special early retirement date which is the first day of the month coincident with or next following the month in which the Member’s Continuous Service terminates, and
(b) the Member will be entitled to receive a special early retirement pension.
For the purposes of the Plan, “Continuous Service” means an uninterrupted period of employment (sections 2.9 and 5.1), a “Member” means an employee or former employee who has become a member of the Plan and continues to be entitled to benefits under the Plan (section 2.29) and “normal retirement date” means the first day of the month coincident with or next following a Member's 65th birthday (section 7.1).
The Principal Statutory Provisions that are Relevant
The provisions of the Act that are particularly relevant to this proceeding are as follows:
40.-(1) A pension plan may provide the following ancillary benefits:
- Early retirement options and benefits in excess of those provided by section 41 (early retirement option).
41.-(1) A former member is entitled to elect to receive an early retirement pension under the pension plan if he or she,
(a) terminated employment on or after the 1st day of January, 1988;
(b) is entitled to a deferred pension under this Act; and
(c) is within ten years of attaining the normal retirement date.
74.-(1) A member in Ontario of a pension plan whose combination of age plus years of continuous employment or membership in the pension plan equals at least fifty-five, at the effective date of the wind up of the pension plan in whole or in part, has the right to