Pension Plan Administration Recent developments in Quebec Me Michel Gilbert Partner

Article 150: ‘’Except in the case of an insured plan, the pension committee shall act in the capacity of a trustee.’’ In Quebec, in accordance with the law (Supplemental Pension Plan Act, R.S.Q. chapter R-15.1), a pension committee is responsible for the administration of the pension plan.

According to Article 151 of the Law: ‘’The pension committee shall exercise the prudence, diligence, and skill that a reasonable person would exercise in similar circumstances; it must also act with honesty and loyalty in the best interests of the members and beneficiaries.” ‘’The members of the pension committee shall use in the administration of the pension plan all relevant knowledge or skill that they possess or, by reason of their profession or business, ought to possess.”

That standard of practice for the committee constitutes the legal foundation in recent class actions filed against members of pension committees because they failed to carry out their fiduciary obligations in managing the pension plan.

Administrators who have fiduciary obligations are not signatories of the collective agreement. Therefore, actions filed against them do not fall within the authority of the grievance arbitrator. Société Asbestos Ltée vs. Lacroix, 2004 CanLII (Qc C.A.)

Coutu vs. Roy, 2006 Qccs 298 (Mine Jeffrey) At the time of the review of the investment policy for the plan, in 1999, the pension committee increased the % of actions from 44.7 to 73%. The company goes bankrupt in The plan, 64% solvent, is liquidated. Authorized class action filed by ex-members (near 7 M) against: - the pension committee and its members - the pension plan administrator - the consulting actuaries.

Syndicat général des professeurs et professeurs de l’Université de Montréal vs. Gourdeau, 2007 QCCS 4531 The investment committee for Université de Montréal’s pension plan, who acted for the pension committee, invested near 100 M in a Fund (Lancer) which has now lost all its value. The Court authorized the Union to file a class action - against the investment committee members - in the name of all the pension plan participants and beneficiaries - in favour of the pension fund.

In regard to that cause, the Court will have to decide: Whether the Union has the necessary grounds; the plan is still showing a surplus and there would be no direct prejudice to the members. Whether the Union can file a class action in the name of the trustee when the union is a third party in relation to the trustee and its administration.

Committee members are confronted : to the increasing complexity of the issues they have to deal with; To the perspective of liability suits. The purpose of Bill 30, sanctioned 13 December 2006, is to : Improve the governance of pension plans; Clarify the roles and responsibilities of pension committees members and other persons involved in the administration of pension plans.

IMPROVING GOVERNANCE: Since 13 December 2007, every pension plan committee must adopt internal by-laws identifying: -the respective duties and obligations of the committee members -the risk management measures; -the internal controls; -the rules to be followed when selecting, remunerating, supervising or evaluating delegatees, representatives, or service providers. (Article 151.2, Act to amend the Supplemental Pension Plans Act)

Responsibilities of Pension Committee Members Therefore, ‘’The pension committee is presumed to have acted with prudence where it acted in good faith on the basis of an expert’s opinion ‘’ (Article 151.1, Act to amend the Supplemental Pension Plans Act).

However, the presumption of prudence can be overturned when: The person is not a real expert. Magasin à rayons Peoples inc. (Syndic de) vs. Wise, 2004 CSC 68 The expert’s advice to the committee does not specify the conduct to adopt.

Therefore, ‘’ The person or body exercising delegated powers shall assume the same obligations an incur the same liability as those the pension committee or one of its members would have had to assume or have incurred if the powers had been exercised by the pension committee. The same applies to service providers and representatives who exercise a discretionary power belonging to the committee.” (Article 153 of the Act to amend the Supplemental Pension Plans Act) ‘’ Delegatees, representatives and service providers may not exclude or limit their liability. Any clause to that effect is null.’’ (Article of the Act to amend the Supplemental Pension Plans Act)

RETIREMENT AND FINANCIAL CRISIS Abitibibowater inc. (Arrangement in relation to) 2009 QCCS 2152 –On 17 April 2009, the tribunal ordered to place Abitibibowater under the protection of the Companies’ Creditors Arrangement Act (CCAA). –On 27 April 2009, Abitibi informs the union that it is postponing the improvements to the pension plan that were to be in effect on 1 May The Court declares void and null the employer’s decision. The employer cannot hide behind the CCAA to free itself from the conditions imposed by negotiated collective agreements.

RETIREMENT AND FINANCIAL CRISIS Bill 1 modifying the SPP in order to minimize the impact of the financial crisis (sanctioned 15 January 2009). Among the measures adopted : -Extension of the amortization period for the consolidated deficit from 5 to 10 years -Securing retirees’ benefits in the event of the termination or withdrawal of their pension plan after 30 December 2008 and before 1 January Measure that applies to Quebec workers, whether the plan is registered in Quebec or in another province.

CONCLUSION