The Nova Scotia Labour Board has ordered St. Mary’s University to resume making pension contributions for employees on long-term disability leave, reasoning that the pension committee had no authority to make changes to contribution levels mandated by the plan.
“The board found that amendments to the pension plan proposed by the pension committee — the administrator of the pension plan — was outside the scope of the committee’s authority,” says Bettina Quistgaard, a pension lawyer at Pink Larkin who represented the university’s faculty members.
In 2018, the pension committee amended the plan so members on LTD leave could choose to continue making contributions and, if the member so elected, the university was bound to continue its contributions. However, the amendment stipulated neither plan members nor the university would make direct contributions during the leave period. Instead, the LTD insurer would remit a percentage of the member’s insured earnings as credits to the member’s account.
The pension committee submitted the amendments to the superintendent of pensions for registration. Subsequently, the faculty union applied to revoke the registration.
In 2022, the deputy superintendent issued a notice of intended decision advising she intended to revoke the registration and require the university to comply with the plan’s original terms. In her view, the committee had no authority to make the amendments because they effectively changed the contribution rate stipulated in the plan in direct contravention of the committee’s terms of reference, which stated “the committee shall have no authority to establish nor change employer/employee contribution rates under the plan.”
The university challenged the notice at the labour board. The parties turned to mediation, which resulted in an agreement to revoke the amendments and restore the original provisions as of Sept. 1, 2023, after which the university would make retroactive contributions with regard to members on leave while the amendments were in effect. The labour board substantially accepted the settlement and incorporated it in a consent order.
“The labour board order required the superintendent to revoke the registration for the reasons given in the [notice of intended decision], thereby preserving those reasons,” says Quistgaard. “The order makes all our affected members whole and we regard it as a validation of our position.”
Ari Kaplan, a pension lawyer and mediator at Kaplan Law who wasn’t involved in the case, says the Nova Scotia regulator recognized the amendments purported to change rights retroactively. However, he notes the superintendent agreed to the settlement despite the fact that it didn’t precisely mirror the remedies directed in the notice of intended decision.
“And that’s precisely what should happen when a pension plan needs repairs in order to resolve a dispute — the regulator should defer to the parties in terms of how they craft the repair.”
The position taken by the regulator is diametrically opposed to the position taken by the Financial Services Regulatory Authority of Ontario in a recent case involving Brewers Retail Inc., notes Kaplan.
In that case, in which Kaplan represented a group of Brewers Retail pension plan members, the FSRA reneged on a settlement agreement tentatively approved by its regulatory predecessor. Both the Ontario Superior Court of Justice and the Court of Appeal upheld the parties’ right to come to their own settlement and awarded costs against the FSRA.
“It’s best for all the stakeholders in a pension plan if the parties can resolve a dispute without the necessity of a win/lose result,” he says. “Regulators should be encouraging such resolutions to repair problems with problematic plan text and should show flexibility and deference in heeding parties’ arm’s length negotiations.”