Amendment

• Author: Ari N. Kaplan
• Profession: Partner, Koskie Minsky LLP. Faculty of Law, University of Western Ontario
• Pages: 437-501

CHAP TER 8

AMENDMENT

A. INTRODUCTION

A pension plan is a dyn amic vehicle that will invariably undergo chan-

ges over its lifetime. Companies reorgan ize and purchase a nd divest

themselves of operations, busi nesses, and div isions. Pension fund ex-

perience ebbs and f‌l ows with inve stment market conditions. Union-

ization and workplace environments affect membership coverage and

contribution levels. These factors and others can impact on the need or

desire of an employer to revisit the prov isions of a pension plan.

In deference to freedom of contract, the Pension Benef‌i ts Act1(th e

PBA) contemplates the living and evolving d imension of a pension plan.

As matters relating to pen sion plan design, the implementation of plan

amendments and corporate transactions affecting the plan generally

fall withi n the purview of plan sponsorship and the particular needs

of the stakeholders as ref‌l ected in the plan documentation. However,

the legislation sets out a number of mostly procedural, but also some

substantive, constra ints in relation to permitting a sponsor to make

a change affecting a pension plan. The purpose of the PBA’s ame nd-

ment and corporate trans action provisions are to ensure that accrued

pension benef‌i ts and ot her employee interests in the pension plan are

protected and that employees receive due notice of changes affecting

1 R.S.O. 1990, c. P.8 [PBA].

437

PENSION LAW438

their pension rights. At the same time, the legislat ion gives reasonable

latitude to employers to carry out corporate t ransactions that require

unilateral changes to pen sion plans. In addition to the requirements of

the PBA, contractual, trust, and other common law considerations can

have the effect of regulating — and sometimes limiting — pension plan

amendments and business transactions.

This chapter explores the delicate balancing of employer and em-

ployee rights when a pension plan undergoes any of the changes de-

scribed above.

B. PLA N A MENDMENT

1) Introduction

The authority to make an amendment to a pension plan i s generally a

function of contract. The PBA does not require, as a condition of regis-

tration, that a pension plan set out the manner by which amendments

to the plan may be made. A pen sion plan’s amending formula is usu-

ally left to the plan sponsor, often the employer, to draft in accordance

with general legal and contractual principles. Typically, a pension plan

amendment is adopted by way of a resolution of the board of directors

of the company that sponsors and administers the pen sion plan.

An exception to this rule is where the plan documentation con-

fers on the plan administrator certain powers of plan amendment. This

is a function commonly seen in multi-employer pension plan (MEPP)

agreements or other plans co-s ponsored by a trade union. In addition,

where employees represented by a trade union participate in a pension

plan, but the union itself is not involved in t he sponsorship or gov-

ernance of the plan, some plans will require, as a m atter of collective

bargaining, th at the consent of the union be obtained or that the union

be notif‌i ed with respect to all or certain ty pes of amendments made to

the plan.

These exceptions aside, most employer-sponsored pension plans

reserve to the employer a broad power to unilaterally amend the plan

terms with only m inor constraints. A s a pure matter of contract, this

is defensible; but like many areas of pension law, regulatory and equit-

able considerations, in addition to contractu al ones, serve to inform

our understanding of the applicable legal principles.

Amendment 439

2) Formal Statutory Criteria

a) Introduction

This section discusses the principa l requirements of the PBA in con-

nection with the regist ration and implementation of a pension plan

amendment.

b) Application for registration

The pension plan admini strator is the person who must apply to the

Superintendent to f‌i le and reg ister an amendment to the pension plan.2

Similar r ules apply in other juri sdictions.3 An amendment is not effect-

ive until the administrator commences this process.4 Once the amend-

ment is f‌i led, the amendment may be binding and enforceable and the

administrator has an obligation to administer the plan in accordance

with its term s, as amended, pending its formal regist ration.5 An amend-

ment f‌i led for registration may be made effective pros pectively or retro-

actively.6 An amendment with retroactive effect w ill generally be valid

provided it does not reduce accrued b enef‌i ts.7

c) Notice of registration

After an admini strator f‌i les an ap plication for registrat ion of an amend-

ment, the Superintendent must issue a notice of regi stration.8 This is

a formal requirement of the PBA. There is “no magic” in the is suance

of a notice of registration and the mere accepta nce for registration by

the Superintendent does not ensure that the amendment is otherwise

valid.9 Registration of an amendment does not cure any invalidity of

2PBA, s. 12(1). The application must be made withi n 60 days after the date t hat

the plan was a mended. The application for registr ation of the amendment must

be accompanied by a fe e and f‌i led w ith certif‌i ed copies of the “amending doc u-

ment” (e.g., board resolution) and other pre scribed documents: s. 12(2).

3 See federal (PBSA , s. 10(1)(b)), Alberta (AEPPA, s. 20(1) and Reg., s. 27(2)), Brit-

ish Columbia (BCPBSA, s. 15(1)), Manitoba (MPBA, Reg., s. 9(2)), New Brun s-

wick (NBPBA, ss. 11(1) and 24(2) and Reg., s. 5(1)), Newfoundland and La brador

(NLPBA, s. 18(1)), Nova Scotia (NSPBA, ss. 18(1) & (2) and 32(2)), Quebec

(QSPPA, ss. 19 and 24–25), Saskatchewan (SPBA, s. 17).

4PBA, s. 13(1).

5Consumers Packaging Inc. v. Super intendent of Financia l Services (29 November

2002), File No. P0162-2001 at 12 (Ont. FST) [Consumers Packaging].

6PBA, s. 13(2).

7 Chapter 8, section B(4)(b).

8PBA, s. 17. The Superintendent must issue a se parate notice of registrat ion for

each pension pl an amendment registered.

9Consumers Packaging, above note 5 at 12.