Do you have a pension problem that requires a solution? Confused about where you should turn for a determination? The answer will depend on the nature of the legal issue, whether the pension plan under which your concern arose is part of your collective agreement, or if the issue involves a breach of pension legislation. Pension legislation is “minimum standards” legislation because it sets out the minimum level of protections which must be provided to plan members and pensioners.
There are three main forums for resolving a pension dispute. However, they are not airtight silos so some problems can be resolved in more than one forum. That means you may have more than one choice as to how to proceed. If you do have options, considerations such as cost, strategy and timing may help you decide.
For example, unions commonly seek to secure pension benefit levels and pension contribution rates in collective bargaining. If there is clear language to that effect in your collective agreement, an unauthorized contribution rate change or a reduction in the benefit formula will likely be arbitrable. However, in the absence of a clear and specific collective agreement language, access to arbitration will often depend on whether the plan is incorporated by reference into the collective agreement, like in this language:
The Pension Plan forms part of the Collective Agreement. All employees who are eligible for the Pension Plan and who have joined the Employer’s work force on or after May 31st, 1944, will join and participate in the Pension Plan sponsored by the Employer as a condition of employment. (St. Mary’s Cement Inc. v. U.S.W., Local 9235, 2010 CarswellOnt 7630)
In that case, the arbitrator found the union’s grievance challenging the unilateral conversion of the company’s defined benefit pension plan to a defined contribution plan to be arbitrable because the plan expressly formed part of the collective agreement. But beware – they also decided that the union could not stop the conversion because the pension plan itself, which was incorporated in whole into the collective agreement, permitted the company to unilaterally change the plan rules.
Wherever possible, it is important to be specific in the collective agreement about the benefit, contribution or other terms of the pension plan you may want to protect and enforce through the grievance and arbitration process.
Complaint to the Pension Regulator (in Ontario, Financial Services Regulatory Authority – “FSRA”
If your pension dispute involves the operation, application or breach of minimum pension standards, it may fall within the scope of the pension regulator’s authority (FSRA or the pension regulatory body in your jurisdiction of employment). The rules that must be followed by pension administrators and their
sponsoring employers, as well as the power of the FSRA to enforce them, are set out in the Pension Benefits Act (“PBA”).
For example, if the employer has failed to make its required contributions to the plan in violation of the PBA, denied participation in the plan to an entitled class of employees, or otherwise failed to meet the minimum standards of the PBA, FSRA’s CEO can enforce compliance. A written complaint can be made to FSRA and may be investigated by FSRA staff. Depending on the circumstances, FSRA may issue a “Notice of Intended Decision” (or “NOID”) which requires, or refuses to require, action by the employer and/or the plan’s administrator. A request for review of a NOID may be made to the Financial Services Tribunal, where the matter would be heard anew. This is a good dispute resolution option for minimum standards issues because FSRA has a duty to investigate alleged breaches and there is no cost to file a complaint. FSRA’s powers are quite broad and intervention by the regulator can be very effective. The process can be lengthy, however.
There will be limited situations where a civil proceeding is available or desirable. Apart from the cost, the main hurdle to proceeding in the courts is the exclusive jurisdiction of the grievance arbitrator and the rule in Weber v. Ontario Hydro that courts have no jurisdiction to decide a dispute if its “… essential character, arises from the interpretation, application, administration or violation of the collective agreement”.
Nonetheless, where there is no collective agreement or the nexus of the dispute to the collective agreement is questionable, the civil courts may be a proper forum. A superior court’s remedial jurisdiction – it can award all manner of damages and equitable remedies, as well as costs – is far broader than that of a grievance arbitrator or the regulator. It may also be faster and less expensive. For example, where a group of pension plan members or retirees are all negatively affected by an illegal act by an employer or plan administrator, a class action may be an appropriate and cost-effective vehicle.
The courts should also be the forum of choice for claims alleging a breach of fiduciary duties. Although pension administrators have a statutory fiduciary duty o.f care under the PBA, FSRA has been historically reluctant to rule on the existence of a breach and cannot award damages.
In addition to the above options, there may be other specialty forums that are accessible for resolving your dispute, like the human rights adjudication system if the legal issue involves alleged discrimination on prohibited grounds. In any event, careful consideration of the legal issue at play will be an important first step in determining where your best chance of success lies