Paul Litner's post Plan Communications: The New Battleground for Pension Disputes highlighted recent cases, which reinforced the need for employers to make accurate and timely pension plan member communications a top priority in plan governance and risk management. The recent Re Greyhound Canada Transportation Corp. and Amalgamated Transit Union arbitration, where the employer was found liable for failing to provide commuted value calculations to a member, is yet another case which highlights this need.
In this case the member in question had requested information on the commuted value of his pension with a view to retiring. However this information was never provided and he died the following year. The spousal benefit on his death was approximately $185,000; whereas, had he elected prior to his death to retire and take the commuted value of his pension he would have received approximately $261,000. The union then launched a grievance requesting that the differential between these amounts be paid to the spouse.
Based on his review of the case law, the arbitrator found that Greyhound was under a fiduciary duty to provide employees with the information in its possession “affecting their financial futures”, including commuted value calculations for those employees facing retirement. In addition, the arbitrator noted that the parties had negotiated a Letter of Understanding, dated January 1, 2008, which required Greyhound to provide the commuted value information. The Letter provided: “Effective January 1, 2008 an employee will once in their career and at retirement be provided with pension value information. This would include the commuted value.”
The arbitrator also held that the information request must be handled within a “reasonable period of time”, noting that “what is reasonable can vary, and probably to a large extent depends on the factual circumstances presented on a case-by-case basis.” Based on the evidence presented, the arbitrator determined that the deceased member most likely would have retired and received the commuted value of his pension prior to his death had he been provided the necessary information.
While this case seems to have revolved around its particular facts, it nevertheless underscores the importance of having procedures in place for responding to member information requests and ensuring that such requests are handled promptly and accurately. This should also include a process for making determinations as to whether or when the employer or administrator is obliged to provide such requested information and for communicating that to the member.