While a recent dispute between the Canadian National Railway Co. and the surviving same-sex partner of a deceased plan member will likely inspire other plan sponsors to ensure pension benefits are correctly distributed, the amount of new claimants coming forward will likely be relatively small, says Jill Wagman, managing principal at Eckler Ltd.
“It may be a catalyst for other plans to look at not just prospective application but also retroactive application. There was probably a reluctance for some people to come forward who didn’t realize they were entitled or were afraid to speak up. There’s going to still be some reluctance, but hopefully it’s a catalyst for the plan members to raise the awareness that they’re entitled. . . . Even if this opens the floodgates, the flood will be very small.”
In May, the Canadian Broadcasting Corp. reported Newfoundland resident Ken Haire was in a years-long battle with CN Rail over access to spouse Gerry Schwarz’s pension benefits. The CBC’s report said Haire’s claim was initially rejected because Schwarz retired in 1991, prior to a 1998 policy amendment that provided pension benefits to same-sex common-law partners of deceased employees. Days later, the CBC reported CN Rail reversed its decision to award Haire with pension benefits.
After the reversal was made, in an email to Benefits Canada, Mathieu Gaudreault, senior advisor for media relations and public affairs at CN Rail, said the company was updating its pension policy immediately. Gaudreault also said it was contacting pensioners in situations similar to Haire’s and awarding them benefits retroactively. “We sincerely apologize to those impacted. The company has made firm commitments to increasing inclusion and diversity in our workforce, both in Canada and the U.S. We’ve made it clear that our LGBTQ+ employees are welcomed and valued and accorded the same rights and privileges as all our [employees].”
A series of legal precedents set in the late 1990s and 2000s changed the laws governing distribution of pension benefits among same-sex couples. These include the 1998 decision in Rosenberg v. Canada, in which the Ontario Court of Appeal upheld an argument that the Income Tax Act’s opposite-sex definition of spouse violated the Canadian Charter of Rights and Freedoms. A decision the following year in M v. H struck down the opposite-sex definition of spouse in the Family Law Act.
British Columbia and Ontario were the first provinces to recognize same-sex marriage in 2003. Two years later, the federal Civil Marriage Act enshrined same-sex marriage across the country.
Susan G. Seller, a partner in the Toronto office of Bennett Jones LLP and the head of its national pension and benefits practice, says while these precedents resulted in private pension plans adjusting policies to accommodate same-sex couples, some did so only on a go-forward basis, leaving behind surviving partners of plan members who retired and passed away prior to these amendments.
“Even though plan sponsors would have amended their plans in accordance with the law when it changed as a result of those judicial decisions, they might not have amended their plans retroactively to recognize same-sex survivors and would continue to administer the plan based on the terms as they existed at the time of the member’s retirement. It appears that’s essentially what happened at [CN Rail].”
While married couples are easier for plans to identify when determining eligibility for retroactive benefits, common-law relationships pose more of a challenge and often puts the onus on the plan member, she says.
“As a practical matter, what many plan administrators currently do is have members sign a declaration at the time of retirement stating they have a spouse that qualifies. . . . That would be the only way to do it — to canvas retirees or look back at your records to determine whether anyone had come forward. Those are difficult issues for sure.”
This is the third part in a series of articles running this month to dive into how the HR, benefits, pensions and institutional investment industries are supporting the LGBTQ2S+ community during Pride Month and beyond.
Read the first story in the series here: Pride Month: TD taking intersectional approach to supporting LGBTQ2S+ employees
Read the second story in the series here: Pride Month: How employers can create a more inclusive work culture
Read the fourth story in the series here: Pride Month: Institutional investors focusing on inclusivity, social factors