After finding that an erroneous amendment to its pension plan had the unintended effect of increasing benefits payable under the plan to deferred vested members who elected to retire before their normal retirement date, Amcor Packaging Canada, Inc. (Amcor) successfully applied to the Ontario Superior Court to have the plan text corrected.


In an effort to contain costs and minimize its long term financial risks, Amcor amended its hourly and salaried plans, which were both defined benefit (DB) plans, to close the DB component of both plans to new hires and to add a new defined contribution component to each plan for new hires. Restatements of the plans as of January 1, 2005 were drafted by the plans’ actuary (with input from Amcor) and filed with the regulatory authorities. None of these documents reflected an intention to otherwise amend the benefit formula in the DB component of the plans.

Amcor subsequently replaced the actuarial firm which had been involved in drafting the plan restatements and the new actuarial firm discovered that the hourly plan restatement included a change to the plan terms that had the unintended effect of increasing benefits for members whose employment was terminated prior to age 55 and who subsequently elected to retire prior to age 65.

Upon discovery of this change, Amcor reviewed its records, including e-mails, memoranda, meeting notes and resolutions of its board of directors, and found nothing to indicate that it was intended that benefits would be increased in such circumstances. Further, following the hourly plan restatement, all information communicated to plant managers, controllers and plan members expressly stated that there were no changes to the existing DB component.

Amcor brought an application for rectification of the plan text.

Court Grants Amcor’s Application

The Ontario Superior Court began by referring to its jurisdiction to grant the “equitable remedy of rectification” to correct a mistake in a legal document. The Court referred to its earlier decision in Kraft Canada Inc. v. Pitsadiotis and noted that rectification was available in the pension context. The Court also stated that the fact that the pension plan was a unilateral document (i.e. not negotiated with the employees) was not an impediment to granting rectification.

The Court then examined the specific facts in the case and went on to find that it was clear from considering the record “on an objective basis” that an unintended mistake was made. Specifically, the Court noted that it did not make sense for Amcor to have closed the DB component to new hires, only to provide an enhanced early retirement benefit to plan members who terminated employment with the company before reaching age 55. In addition, the Court held that there was no evidence of the employees having relied on the mistake.

Thus, the Court concluded that Amcor was entitled to have the plan text rectified in order to correct the earlier amendment made in error.

Lessons Learned

This case provides a good reminder that all pension plan amendments should be carefully reviewed to ensure that they do not unintentionally alter other provisions in the plan. The Amcor case also highlights the benefits of supplementing any formal changes to plan documents with parallel documentation describing the changes to the plan. In this case, Amcor was successful in its bid to rectify the plan terms largely because it had the evidence – in the form of board resolutions and plan member communications – to convince the Court of its true intentions.