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news Reforms lead to busy year for pension law CPP proposals, provincial reforms, HBC ruling alter the landscape BY ANDI BALLA P ension law experts were busy in 2010 as reforms at the federal and provin- cial levels and pension-related court activity grabbed the headlines. The idea behind the federal reforms is to make sure Canadians are saving enough for retirement. Supporters say not enough middle-income earners are signing up for pension funds and too few people are taking advantage of registered pension plans or do not have access to them. Others, meanwhile, are choosing not to use other savings options available to them under tax regulations. So when federal and provincial finance ministers met in July in Prince Edward Island to discuss the proposed reforms, they took a two-track approach to the system. One is to expand the mandatory Canada Pension Plan portion of the retire- ment income system by a modest amount, which is still under discussion. The other reform would facilitate voluntary defined- contribution plans, including through the introduction of multi-employer schemes. "People find it difficult to save on their own," says Bruce Macnaughton, director for pension and income security at the Ontario Ministry of Finance, which supports the CPP expansion. "Many people don't have investment expertise, and the fees if you invest on your own are much higher than the fees for institutional investors." But Alberta is against the CPP expan- sion, says Jason Maloney, a spokesman at Alberta Finance and Enterprise. "The fed- eral government is trying solve the issue with a huge hammer to hit a little nail. It's an overreaction." Alberta's argument is that boosting the CPP will lead to workers having less take- home pay and losing the choice to invest on their own. So with Ontario and Alberta at opposite ends and the other provinces standing somewhere in between, federal Finance Minister Jim Flaherty seems to be looking for middle ground. "I believe that we should consider a modest, phased-in, and fully funded enhancement to defined benefits under the 2010 top news & newsmakers 11 ffin_LT_Splmnt_10.indd 1 11/23/10 3:30:39 PM Canada Pension Plan in order to increase savings adequacy in the future," Flaherty wrote in a July letter to the provincial finance ministers. Beyond the federal system, a number of provinces are looking to reform their own pension laws, including Ontario, Nova Scotia, Alberta, and British Columbia. Ontario has been especially busy in 2010, says Kathryn Bush, an expert on pen- sion reforms and a partner at Blake Cassels & Graydon LLP. The province is looking to tighten pension rules for companies by requiring sustainable funding of promised benefits and tougher funding standards for benefit improvements. The Ontario government also wants to clarify pension surplus rules and provide a dispute-reso- lution process to allow members, retirees, and sponsors to reach agreements on how GIFFIN KOERTH surplus should be shared. Until the Ontario reforms are fully implemented, there is a grey area about sharing the surplus when a company or part of a business is purchased. The situation has led to court cases like Burke v. Hudson's Bay Co., which went all the way to the Supreme Court of Canada. The SCC ruled in Octo- ber that Hudson's Bay Co. did not have to transfer a portion of the defined-benefit pension plan asset surplus to the employees when it sold one of its divisions to another company. HBC was also allowed to charge administration expenses into the plan. However, the much-anticipated decision failed to set a blanket precedent because the court said future transactions of this kind should be treated on a case-by-case basis depending on the wording of the pension plan terms. SMART FORENSICS How you look at it matters There's more to smart forensics than superb science and a knack for solving puzzles. Here's our view on what makes a preferred partner. preferred partner. 360 Services The real world is complex. Forensic files mirror that complexity. So should forensic services. Unshakeable Science To win more cases and settle to greater advantage, do the forensics first. Clear Communications Your case is not compelling unless it's clear – and the telling holds up under fire. Collaborative Work Style Today's cases are simply too involved for people to work on their own. If you see it the way we do, give Chris Giffin a call at 416.368.1700. Giffin Koerth is located in downtown Toronto at 40 University Ave., Suite 800, M5J 1T1 Vital Culture People make a difference – especially when you make a difference for them. www.giffinkoerth.com