Later this month, the Supreme Court of Canada will hear an appeal from the British Columbia Court of Appeal’s decision in Withler v. Canada. The issue in Withler is whether a supplementary death benefit under a pension plan that is reduced for every year the plan member’s age exceeds a specified age violates the right to equality under section 15 of the Charter.

If the Supreme Court overturns the Court of Appeal decision and rules that this death benefit is discriminatory and contrary to the Charter, public sector plans which use age-based criteria to calculate certain benefits could find themselves facing a similar Charter challenge. Similarly, an adverse ruling by the Supreme Court could potentially be used in the private sector as a new basis to argue that the use of age-based criteria in pension plans violate provincial and federal human rights legislation.

The Withler case arose as a class proceeding, which was initiated by the surviving spouses of deceased members of the Public Service Superannuation Act (the PSSA) and Canadian Forces Superannuation Act (the CFSA). The spouses received a supplementary death benefit (SDB) upon the death of the member, the amount of which differed depending on the age of the plan member. Provisions in the PSSA and the CFSA permitted a 10% reduction in death benefits for every year the plan member exceeded age 65 (for the PSSA) or age 60 (for the CFSA). The surviving spouses argued that the reduction provisions constituted age discrimination, contrary to s. 15 of the Charter.

The trial judge found that differential treatment on the basis of age existed, but concluded that the SDB reduction provisions did not constitute age discrimination under the Charter. The class members’ appeal to the British Columbia Court of Appeal was similarly dismissed.

The majority of the Court of Appeal found that the SDB was intended to meet differing needs, depending on the age of the employees. At younger ages, the SDB would provide a limited stream of income to spouses for the plan member’s unexpected death. At older ages, the SDB was intended to provide for expenses associated with illness and death, while the pension would provide the income stream. The Court of Appeal stated:

This case demonstrates the difficulty that arises when one attempts to isolate for criticism a single aspect of a comprehensive insurance and pension package designed to benefit an employee’s different needs over the course of his or her working life. The trial judge concluded that, viewed in context, the supplemental death benefit was the part of a larger scheme comprised of group insurance and pensions designed to look after the changing needs of an employee as he or she remained in the workforce and then retired...The comprehensive plan, while not a perfect fit for each individual, did not meet the hallmarks of discrimination given that it was a broad-based scheme meant to cover the competing interests of the various age groups covered by the plan.  

As a result, the Court concluded that while the SDB differentiated based on age, it did not discriminate contrary to section 15 of the Charter.

While the Court of Appeal’s findings provide some comfort to administrators of public sector plans (particularly those plans that currently provide benefits which may vary according to the member’s age), the fact that the Supreme Court has granted leave to hear the appeal in this case means that this is still an open issue. If the Supreme Court overturns the Court of Appeal decision and decides that the SDB in Withler does violate the Charter, all public sector plan administrators should review their plans for possible Charter violations.

Although this case may not appear to be directly applicable to private sector plans (which cannot be specifically subject to a Charter challenge) members of such plans may use Withler to argue that the exemptions in many human rights statutes which currently permit certain age-based requirements in pension and benefit plans are contrary to the Charter.

The operation of these exemptions under human rights legislation was recently illustrated in the Ontario Human Rights Tribunal’s decision in Kovacs. In that case, the Tribunal relied in part on the exemption for the use of age-based requirements in pension plans under the Ontario Human Rights Code in reaching the conclusion that age-related eligibility criteria used in the context of a voluntary early retirement window did not violate the Code. It will be interesting to see whether the analysis in the Withler case has any impact on the availability of the exemptions under human rights legislation or on any other aspect of the use of age-based criteria in private pension plans.

Given the potential impact on age-based criteria in pension and benefit plans, the Supreme Court’s upcoming decision in Withler is one that all plan administrators should have their eye on.