REGULATORY UPDATE
FSRA Pension Update
The Financial Services Authority of Ontario released its latest Pension Update on April 17, 2025. It sets out the following:
- As of December 31, 2024, the median solvency ratio was 122% (up from 121% at the end of the previous quarter) due to a slight decrease in pension liabilities and marginally positive fund investment returns.
- Interested parties were asked to apply for openings on the Stakeholder Advisory Committee for Pensions, with new two- or three-year terms starting this summer.
- Most applications, such as amendments, filing extensions and Pension Benefits Guarantee Fund (PBGF) assessments, must be submitted through the Pension Services Portal.
- Electronic PBGF assessment payments should be made one to two business days before the due date to avoid late charges, which are subject to a 20% penalty and interest.
- Plans considering a contribution holiday must, within 90 days of the plan’s fiscal year, file a cost certificate showing that the plan has sufficient available actuarial surplus (AAS). AAS must be reassessed as of the first day of the current fiscal year, but cannot be greater than that disclosed in the last filed valuation, adjusted to reflect any amounts funded from AAS since the date of the last valuation. There must be a cost certificate, even if the plan has “excess surplus” under the federal Income Tax Act.
CASELAW
Survivor Benefits
In McCulloch v McCulloch, the husband had a partnership retirement allowance (PRA) through his employment. On divorce in 2003, the PRA was divided as matrimonial property. The husband had to direct the PRA administrator to pay a monthly amount directly to his former wife, or to be designated a trustee of her share of benefits. He could not name another beneficiary and, if he remarried, he had to charge his new spouse with these obligations. Finally, the husband was directed to select a joint survivor option “in consultation with the wife”. Subsequently, the husband remarried. On his death in 2023, the first wife claimed entitlement to the entire PRA death benefit.
The Alberta Court of King’s Bench held that the husband’s death did not change the original sharing agreement which included the PRA death benefit, and that there had been no direction to designate the first wife as beneficiary of the husband’s share of that benefit. All he had been required to do was select a joint survivor option. Neither did the words “in consultation with the wife” give her a veto over the husband’s selection. Instead, they ensured the PRA did not lapse on death. As a joint survivor had been designated, the first wife remained entitled to her pre-death monthly portion of the benefit, which the second wife was obliged to forward to her via the trust.
Racism in the Federal Public Service – Pension Implications
In Thompson v. Canada, the Federal Court struck claims under a proposed class action alleging that Black public service employees were denied hiring and promotion opportunities because of their race, because the plaintiffs could address their disputes through internal grievance, complaint and human rights processes.
One of the issues addressed by the Court was the alleged adverse impact on Black public servants’ pensions, which would be lower because their salaries had been suppressed over the course of their careers. The plaintiffs relied on the Supreme Court of Canada decision in R. v. Fraser (Attorney General), which involved unconstitutional distinctions between employee groups who participated in the RCMP’s job-sharing program (primarily women with young children) versus those who did not. However, the federal public sector pension scheme could not be linked to any disproportionate and discriminatory impact based on race, and there was no potential remedy comparable to the pension buy-back in Fraser. Therefore, the plaintiffs’ pension inequity claim was “not a separate cause of action, but rather an additional claim for damages, rooted in the same cause of action as the alleged discriminatory hiring and promotion practices”.
Employer Match
WestJet established the WestJet Savings Plan, a voluntary savings program for employees that included a matching RSP/TFSA program and a matching cash savings program. In WestJet Encore v. ALPA, a federal labour arbitrator held that, unlike the situation in Ontario where a variety of different plans are included in the equivalent definition of “pension” for leave purposes, RSPs, TFSAs and other savings vehicles/programs are not “pensions” under section 209.2(1) of the Canada Labour Code. As a result, for employees on maternity or parental leave, WestJet was free to suspend its matching contributions under section 206.2 of the Code after 52 weeks, and was not required to continue providing the match for the duration of the leave – i.e., for up to 78 weeks.
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