Changes Coming in 2015 in the Area of Pension Law
Pension plans were all over the front pages in 2014. We expect that to continue through 2015. Here are a few things we are watching in Quebec:
- Will the stock market and interest rate gains of 2014 continue to improve the funded status of DB pension plans in 2015? Will this lead to surpluses?
- Municipal employees have taken to the streets over Bill 3, which aims to restructure their pensions in order to improve their solvency and sustainability (please click here to see our prior Bulletin LKD-info article on this topic). After two amendments, the Bill was passed on December 4, 2014. However, the protesters have not gone away, and on December 9, 2014 the Fédération indépendante des syndicats autonomes filed a legal action in Quebec Superior Court arguing that the new legislation is unconstitutional. The legislation requires active members and municipalities to begin negotiations to amend the pension plans by February 1, 2015. Disputes, leading to conciliation and arbitration, are expected in 2015 and beyond. We will be watching those developments closely.
- Private employers in Quebec are now dealing with the implementation of VRSPs (Voluntary Retirement Savings Plans) effective July 1, 2014 (please click here to see our prior Bulletin LKD-info article on this topic). They will be implemented in phases: starting in December 2016, employers of varying sizes will be required to enrol their employees in a VRSP (unless exempted). In the meantime, new regulations have been adopted to enable VRSPs to be established by an administrator and authorized by the AMF (Autorité des marchés financiers). In federally regulated industries, employers may offer PRPPs to their employees under legislation adopted in December 2012. A few PRPPs are now established and authorized. It will be interesting to see how many employers get on board.
- Target benefit plans and other risk-sharing design options are becoming popular across Canada. In Quebec, new legislation was adopted in December 2012 enabling the establishment of target benefit plans in the pulp and paper sector. Regulations allowing for the establishment of such plans, notably for Resolute Forest Products and White Birch Paper, were however not enacted until November 2013 (with retroactive effect as of December 31, 2010) and the actual creation of these new plans is still slow in coming.
- On the insolvency front, although the deemed trust status for the unpaid special payments is now definitive in the Timminco matter under the Companies’ Creditors Arrangement Act (see Re Timminco Ltd, 2014 QCCS 174), the issue is expected to be argued again in 2015 under the Bankruptcy and Insolvency Act, in connection with the bankruptcy of Mabe.