What’s a plan administrator to do when an individual makes a claim to a pension entitlement that goes back many years after their employment — or in some cases, the employment of a spouse, partner, parent or even grandparent — has ended and available pension records are inconclusive?
In a perfect world, when pension inquiries are received, the administrator will have records clearly confirming or denying the claim and the extent of such entitlement including member name and membership dates and information on what happened to the pension benefit after employment ended (and, if the entitlement was transferred out, the amount transferred and to where it was transferred).
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Sometimes, available pension records don’t confirm or deny these lost pension claims. Documentation may be less than fulsome where there has been a change in record-keeper, the entitlement being claimed relates to a previous plan or the entitlement being claimed relates to a plan that has wound up many years ago. It’s not unheard of for administrators to find themselves in a challenging position to manage such inquiries.
Depending on the applicable jurisdiction of the inquiry being made, the first step is to ask the inquiring individual to show proof of entitlement.
For claims related to members based in British Columbia, Alberta, Saskatchewan or Manitoba, administrators can rely on these provinces’ pension standards legislation where the onus is on the individual making the claim to demonstrate their benefit entitlement.
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Administrators responding to claims related to Ontario members will need to look to the principle established in case law that an individual claiming entitlement to an employer’s pension plan bears the burden of proving such entitlement, on a balance of probabilities.
This principle was established by Financial Services Tribunal in Hunte v. Ontario (Superintendent of Financial Services). Carl Hunte was employed from 1970 to 1975 and again from 1975 to 1982. Thirty years after the end of his employment, Hunte claimed entitlement to a deferred pension based on the first and second employment periods.
The Canada Life Assurance Co. acknowledged that Hunte was a plan member in the second period of his employment but denied membership in the first period of his employment. Further, Canada Life took the position that Hunte received a refund of basic contributions when he left his employment in 1982 and there was no further entitlement under the plan.
Hunte argued Canada Life was required to prove that he wasn’t a member of the pension plan for the first period claimed. The tribunal disagreed and stated Hunte had the burden of proving he had a valid claim under the plan. Unlike Canada Life, Hunte had no documentary records directly related to his claim. Instead, he relied entirely on his recollection of relevant events 30 to 40 years ago and called witnesses who were intended to corroborate his claim, but didn’t have any personal knowledge of his pension history. The tribunal concluded on a balance of probabilities that Hunte didn’t meet his burden.
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This precedent continues to be applied in Ontario. The tribunal in Ardron v. Ontario (CEO of FSRA) reasserted that an applicant making a claim for a pension entitlement has the burden of establishing such entitlement on a balance of probabilities. This case involved a claim of a pension owing to the applicant’s deceased grandfather going back to 1973 under the predecessor employer plan. To meet the burden of proof, the tribunal required the applicant to provide evidence directly relevant to establishing that an individual was a member of a registered pension plan sponsored by the employer.
The evidence submitted by the applicant to prove his grandfather was a member of a predecessor plan were a member booklet describing the employer’s retirement and group life insurance program and a certificate for life insurance. The tribunal noted the member booklet — which was found in the archives of a university and not among the grandfather’s belongings — didn’t prove the grandfather was a member of the pension plan described in the booklet.
While Hunte and Ardron are helpful decisions for administrators, these decisions are also reminders for plan sponsors to retain a minimum amount of plan member information — including terminated members — in order to defend against lost pension claims. In Hunte, Canada Life had limited documentary records relating to Hunte’s employment and pension history, but the sparse records available were consistent with Canada Life’s version of events.
For terminated members, administrators should at least retain dates of membership, proof of discharge of payment as well as documentation showing how the payment was determined, when it was paid and to where the payment was directed. Pension plans have long time horizons and records related to individuals should be retained for as long as there may be entitlement.
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