Ontario judge approves $11.5 million settlement to pensioners of plan with amended indexing provisions, concluding a protracted case
July 26, 2024
An Ontario judge has approved a settlement worth $11.5 million to pensioners of a pension plan with amended indexing provisions, bringing a long-running class action case to a close.
A group of affected plan members originally claimed that Brewers Retail had failed to pay inflation-indexed benefits dating back to 1974 and that 2013 amendments to the plan limiting indexing should not be allowed. The parties eventually negotiated ongoing 0.9% annual adjustments and adjusted amounts for pre-2010 service, or a lump sum of up to $2,500 depending on employment history, as part of their settlement, rather than going to trial on what could be characterized as an “all or nothing” dispute.
The settlement between Brewers Retail and the group of affected plan members, consisting of approximately 166 active members, 43 deferred vested members, 451 former employees and 124 surviving beneficiaries, was originally reached with the support of the Financial Services Commission of Ontario (FSCO) — the body that was then in charge of pension regulation. However, when the Financial Services Regulatory Authority of Ontario (FSRA) took over from FSCO it declined to sanction the settlement based on its view that the settlement would waive minimum standards under the Pension Benefits Act (PBA). FSRA was of the view that indexing is a "pension benefit" and cannot be limited by amending the Plan. Brewers on the other hand, argued that indexing is an "other benefit" under the PBA, not a "pension benefit”.
In 2020, FSRA issued a Notice of Intended Decision (NOID) rejecting a plan amendment that reflected the settlement agreement. Brewers challenged the NOID by requesting a hearing at the Financial Services Tribunal (FST) and filed an application with the Ontario Superior Court seeking certification of a class action.
The FST adjourned its proceeding in order to allow the Superior Court to decide jurisdiction and make the first ruling on the proposed settlement. At the class action hearing, the Superior Court determined it had jurisdiction and certified the class action. On appeal, The Ontario Court of Appeal upheld the decision, sending the class action back to the Superior Court to decide on the approval of the original settlement.
FSRA then withdrew its opposition, agreeing to accept the settlement if approved by the Court.
Back at the Superior Court, experts assessed the value of the settlement at about half of the pensioners’ entitlement had they been fully successful at trial, but the judge concluded that the settlement was “fair, reasonable, and in the best interests of the Class” given the limited jurisprudence on whether indexing is a “pension benefit” under the PBA.
The court also approved class counsel’s fee of $800,000 as fair and reasonable, considering the actual value of the services provided, the importance of the issues and the success achieved on behalf of their clients.
Click on more information to read the judge's decision:
