Law Times

Law Times • march 2, 2009 FOCUS PAGE 15 Funding relief for pension plans proposed by province BY GRETCHEN DRUMMIE Law Times with solvency funding relief, the McGuinty government has an- nounced. But one Toronto lawyer says the government is "too slow" given our "desperate situation." The measure is "designed to T protect jobs and families during these rapidly changing economic conditions," said a press release is- sued announcing the proposal. The legislation, if passed, would apply retroactively to Sept. 30, 2008. "The proposed legislation would allow businesses to spread their solvency payments over a longer period of time, freeing re- sources for operations, including payroll expenses," said the release. "It would also increase transpar- ency, ensuring that workers and retirees have clear information about the financial health of their plans, while protecting benefit se- curity in a number of ways." "I think we need to examine the government's proposal in context to fully appreciate how inadequate its response has been to the economic crisis. It created an Expert Com- mission on Pension Reform two years ago. The chair of the com- mission admitted that its recently released recommendations did not respond to the financial meltdown. Now, this further proposal by the he province plans to intro- duce legislation this spring to provide pension plans government is much too slow and ill-defined, especially when it is compared to other jurisdictions in Canada such as B.C. and Alberta," Mark Newton, a partner at Heenan Blaikie LLP, tells Law Times. "We're in a desperate, desper- ate situation here and I would have expected something a little bit quicker from the Ontario government at least as a stop-gap measure," says Newton. The eight proposed measures are: • An extension of solvency amortization periods from five to 10 years with the consent of active and retired members of the pension plan, or of the union if the pension plan is subject to collective bargaining. The level of consent and manner of obtaining consent have not been specified, says Newton in a firm bulletin. "Assuming two-thirds consent is required, the timeframe to obtain consent will be very limited." • Existing funding schedules will be able to be consolidated into one. • Catch-up payments, otherwise required when a valuation report is filed, will be deferred. Newton says in the bulletin the "exact time period of the deferral or the mech- anism to reflect the deferral have not been specified, but the deferral is presumably until Jan. 1, 2010." • Permitting the use of actuarial gains to reduce annual cash pay- ments by plan sponsors. "There could be gains, for example, from a higher number of terminations Union seeks leave Continued from page 12 determination of the fairness of a fine must be based on the specific circum- stances of each employee," says Craig in the bulletin. "In this case, the fact that the fine exceeded the employee's take-home pay, at a time when the employee may have already been suffering financially as a result of strike action, supported the conclusion that the fine provisions were very unfair. "Moreover, such fines were in addition to a three-year suspension which was a significant penalty in itself," he further writes. "While the majority recognized that union solidarity is a fundamental principle of the union movement and the collective bargaining process, it found that the means adopted to achieve such solidarity were 'very unfair.'" Craig notes that the union has sought leave to appeal the case to the Supreme Court of Canada. And a similar case, Telus Communications Inc. v. Telecommunications Workers Union is also under appeal to the top court, which involves employees of Telus and the telecommunications union. "It's all part of an attempt by the unions to find as many strategies as they can," Craig tells Law Times. "I don't criticize them for it. I think it's normal within our labour relations system for unions to explore every strategy because of course the employer is going to do the same thing, to find every strategy it can to win the strike too. It's about the power balance. [But] it's unfortunate when individuals who have to pay their mortgages and feed their kids get caught in the middle of this." Craig says, "We were happy with the result but it really just confirmed our understanding of the applicable law. Now the Supreme Court will have the opportunity to really settle the issue. . . . Either the court will refuse the leave application which will be a message that the court does not think that this is an important issue to hear. That's the position we'll take, that the issue isn't one the court should be addressing because it's settled law. But alternatively the court could decide to hear the appeal and resolve the issue once and for all. Then we will have a final decision." LT Untitled-1 1 The Canadian Institute's May 26 & 27, 2009 • Toronto Forum on Labour Law Essential Advice for Unions and Management Leading industry experts will deliver practical advice and analysis, including: • Negotiating layoff s and mass terminations with unions • Identifying bargaining trends from across the country • Grievances and settlement strategies • Highlighting options in meeting pensions responsibilities Register and pay by April 28th and save! www.CanadianInstitute.com/Labour 1-877-927-7936 Priority Service Code: 296AXLT 2/25/09 3:18:58 PM than assumed in the actuarial re- port," says Newton. • Some form of enhanced notice to active and retired plan members will be required. • Accelerated funding of benefit improvements will be required. "This introduces significant un- certainty for pension plans sub- ject to collective bargaining," he says in the bulletin. "This vague proposal makes it very difficult for employers to negotiate in full knowledge of what their finan- cial commitment is." • Temporary limitations going forward on certain contribution holidays. Newton says this is not "much of a concern for most plan sponsors." • Adoption of the revised Canadi- an Institute of Actuaries' standard for practice for pension commuted values for solvency valuations. LT Let us open right door for you the We specialize in Employment and Labour Law in Canada Kuretzky Vassos Henderson is a leading employment and labour law fi rm situated in the heart of Toronto. We are comprised of nine lawyers, all of whom specialize in the area of employment and labour law. We act for many prominent public and private sector employers as well as for individuals. Kuretzky Vassos Henderson LLP Our work includes extensive experience in the areas of: Wrongful dismissal • Human rights • Labour relations/Labour law/Collective barganing • Workplace health and safety • Sexual harassment • Employment standards • Employment contracts • Canada Labour Code • Class actions • Mediation/arbitration/ADR www.kuretzkyvassos.com • 416.865.0504 Kuretzky_LT_Mar2_09.indd 1 www.lawtimesnews.com 2/24/09 12:26:18 PM

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