The Québec legislator recently amended the Supplemental Pension Plans Act (SPPA) to negate the potential impact of the decision rendered by the Québec Court of Appeal in the Multi-Marques case.
On April 2, 2008 the Québec Court of Appeal rendered its decision in Multi-Marques Distribution inc. v. Régie des rentes du Québec, J.E. 2008-840 (Multi-Marques). In overruling the previous decisions of the Québec Superior Court, the Québec Administrative Tribunal and the Régie des rentes du Québec (the Régie), the Court of Appeal held that a pension plan can provide that member benefits payable on plan wind-up are conditional on full funding of such benefits.
On May 29, 2008 the Régie filed an application for leave to appeal the Court of Appeal’s decision to the Supreme Court of Canada. Concurrent with these proceedings, the Régie successfully approached the government to counter the potential impact of the Court of Appeal’s decision via legislation. Bill 68, An Act to amend the Supplemental Pension Plans Act, the Act respecting the Québec Pension Plan and other legislative provisions, was amended while under review by the Committee on Social Affairs to introduce new sections to the SPPA that specifically negate the potential impact of the Court of Appeal’s decision.
During the detailed review of Bill 68, the Minister of Employment and Social Solidarity of Québec, Mr. Sam Hamad, stated that the Court of Appeal’s decision was based on an interpretation of the SPPA which is contrary to the objectives of the act. He added that the decision puts aside the concept of “debt of the employer,” as defined by the SPPA, and calls into question one of the fundamental principles established when the statute came into force on January 1, 1990 – namely, the complete discharge by the employer of its obligations vis-à-vis the plan members and beneficiaries.
Amendments to the SPPA
Bill 68 was passed by the National Assembly on June 18, 2008. It includes amendments to the SPPA which are intended to prohibit the inclusion, in defined benefit pension plans or defined contribution and defined benefit plans, of provisions intended to:
- make the rights of members and beneficiaries conditional upon extrinsic factors so that they are limited or reduced; or
- limit or reduce the obligations of an employer in respect of the plan because of the employer’s withdrawal from the pension plan or the termination of the plan.
New section 14.1 of the SPPA lists certain factors which are considered to be extrinsic factors, including the financial position of the pension fund, employer contributions paid in relation to the obligations arising from the pension plan, the withdrawal of an employer from the pension plan or the termination of the pension plan.
These new sections apply retroactively to January 1st, 1990. They also apply to pending cases. It will be interesting to see what impact Bill 68 will have on the Multi-Marques case.