Arbitrator Rules Advice of an Actuary Cannot Circumvent Fundamental Change Provision of Pension Plan
July 06, 2026
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An arbitrator has ruled that the recommendation of an actuary cannot be used as a workaround to circumvent the provisions of a pension plan that require fundamental changes to be approved in a specified manner.
The Halifax Regional Municipality Pension Plan (the “Plan”) is administered by a pension committee (the “Committee”). The Committee considered making a contribution rate decrease. If the contribution rate decrease was a “Fundamental Change”, the decrease would have needed to be approved in a specified manner.
According to the plan text, a “Fundamental Change” includes an amendment that changes “the contribution rates of Members or the Municipality/Participating Employer, including as a result of the application of surplus to reduce contribution rates, unless such change in contribution rates is required because of a requirement of the Pension Benefits Act or a change to the actuarial assumptions or methods used by the Actuary for the purposes of the Plan.”
To determine whether a contribution rate decrease constituted a Fundamental Change, the Committee obtained two legal opinions. The first opinion concluded that a contribution rate decrease would be considered a Fundamental Change. Conversely, the second opinion concluded that the contribution decrease was being made on the advice of the actuary, and therefore it was not a Fundamental Change.
The Committee approved the contribution rate decrease on the basis that it was not a Fundamental Change, as concluded in the second opinion. One of the union representatives of the Committee dissented, and, pursuant to the dispute resolution process set out in the Plan for whether a proposed amendment constituted a Fundamental Change, the dispute was referred to arbitration.
The arbitrator held that the contribution rate decrease was a Fundamental Change, and therefore the change is subject to the approval process in the Plan for a Fundamental Change. The arbitrator noted that there was no basis on which to conclude that the Plan terms meant that an actuary could simply recommend a change (one not required by law, or one not required by changes to actuarial assumptions or methods) to circumvent the Fundamental Change provisions in the Plan.
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