DISTRESSED PENSION PLAN WORKOUT SCHEME

Marginal note:Application

• 29.01 (1) Sections 29.02 to 29.3 apply only in respect of a defined benefit plan that is not a multi-employer pension plan.

• Marginal note:Agent of Her Majesty

  (2) Sections 29.02 to 29.3 do not apply in respect of an employer who is an agent of Her Majesty in right of Canada.

Marginal note:Definitions

29.02 The following definitions apply in sections 29.03 to 29.3:

“beneficiary”

« bénéficiaire »

“beneficiary” means any person, other than a member, who is entitled to pension benefits under a pension plan.

“representative”

« représentant »

“representative” means a bargaining agent for unionized members or a representative appointed under subsection 29.08(3).

Marginal note:Election of employer

• 29.03 (1) Subject to the regulations, an employer may elect to enter into a distressed pension plan workout scheme, as provided for in this section and sections 29.04 to 29.3, unless the employer is in the process of being liquidated, has made an assignment or has become bankrupt or the whole of the pension plan has been terminated.

• Marginal note:Resolution

  (2) The election must be authorized by a resolution of the employer and, in the case of a Crown corporation, must also be authorized by the Minister and the appropriate Minister, as defined in subsection 83(1) of the Financial Administration Act.

• Marginal note:Declaration

  (3) The election must be made by means of a declaration, in the prescribed form, of an officer of the employer and the declaration must

  • (a) state that the employer does not anticipate being able to make the payments required under subsection 9(1.1) or that the employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act;

  • (b) state that the employer intends to negotiate with the representatives of the members and beneficiaries with the purpose of entering into a workout agreement;

  • (c) indicate, in the case of an employer who is not the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act, what portion of the payments referred to in subsection 29.07(1) the employer intends to defer; and

  • (d) contain any prescribed information.

• Marginal note:Filing

  (4) The employer must, without delay, file the declaration, a certified copy of the employer’s resolution and any prescribed documents with the Superintendent and provide the Minister and the administrator with a copy of the documents filed.

• Marginal note:Notice to members and beneficiaries

  (5) The employer must, in accordance with the regulations, provide notice of the declaration to the members and beneficiaries.

Marginal note:Negotiation period

• 29.04 (1) On the day on which the declaration is filed with the Superintendent, a negotiation period for the purposes of paragraph 29.03(3)(b) begins and, subject to subsections (2) and (3), ends on the date that is determined in accordance with the regulations.

• Marginal note:Extension by Minister

  (2) The Minister may extend the negotiation period by a period of up to three months and, in determining whether to do so, must take into account any written representations made by the employer or the representatives and any other matter that the Minister considers relevant. No more than one extension may be granted in respect of any negotiation period.

• Marginal note:Termination by Minister

  (3) The Minister may terminate the negotiation period by notifying the Superintendent, the administrator, the employer and the representatives of the date of the termination.

Marginal note:Exception

29.05 Despite section 29.04, the negotiation period ends, and may not be extended, on the liquidation, assignment or bankruptcy of the employer.

Marginal note:No termination

29.06 Despite section 11.1 and subsections 29(2) and (2.1), the Superintendent may not revoke the registration of a pension plan or declare the whole of a pension plan terminated during the negotiation period.

Marginal note:Deferral of payments

• 29.07 (1) If an employer makes an election under subsection 29.03(1), the payments to the pension fund that become due during the negotiation period are deferred, to the extent specified in the declaration, except payments that relate to normal cost and payments of the amounts that the employer has deducted from members’ remuneration.

• Marginal note:Non-application of subsection 8(1)

  (2) Subsection 8(1) does not apply to the deferred payments during the negotiation period.

• Marginal note:When deferred payments become due

  (3) The deferred payments and interest on those payments become due immediately if

  • (a) the whole of the pension plan is terminated during the negotiation period;

  • (b) the employer becomes the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act during the negotiation period;

  • (c) the workout agreement does not provide for the payment of the deferred amounts; or

  • (d) there is no workout agreement at the end of the negotiation period.

• Marginal note:Non-application

  (4) Subsections (1) to (3) do not apply if, at the time the election is made to enter into a distressed pension plan workout scheme, the employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act.

Marginal note:Appointment by Federal Court

• 29.08 (1) Once the declaration has been filed with the Superintendent, the employer must, without delay, apply to the Federal Court for the appointment of

  • (a) a representative who has exclusive authority to negotiate a workout agreement on behalf of the beneficiaries; and

  • (b) a representative who has exclusive authority to negotiate a workout agreement on behalf of the non-unionized members, if any.

• Marginal note:Other court

  (2) If the employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act, the employer must make the application instead to the appropriate court as determined by the regulations.

• Marginal note:Eligibility

  (3) The Federal Court or the court referred to in subsection (2) must appoint representatives who meet the prescribed eligibility criteria. The appointment is subject to any terms that the Federal Court or other court considers appropriate.

• Marginal note:Information to be provided to representatives

  (4) Within five days after the day on which a representative is appointed, the administrator must provide the representative with the names and home addresses of the non-unionized members or beneficiaries that they represent and a copy of the declaration.

• Marginal note:Notice to members and beneficiaries

  (5) Each representative — or, if the representative agrees, the employer — must, in the prescribed manner and within the prescribed period, notify the non-unionized members or beneficiaries that they represent of their appointment and provide them with any prescribed information.

• Marginal note:Costs

  (6) The costs associated with the application made under subsection (1) or (2) must be paid by the employer and not out of the pension fund.

Marginal note:Obligation of employer and administrator

• 29.09 (1) The employer and administrator must provide the representatives with any prescribed information in the prescribed manner and within the prescribed period.

• Marginal note:Fees and expenses

  (2) The reasonable fees and expenses of the representatives must be paid by the employer and not out of the pension fund.

Marginal note:Workout agreement

• 29.1 (1) Subject to the regulations made for the purposes of sections 29.03 to 29.09, this section and sections 29.2 and 29.3, the employer and the representatives may negotiate a workout agreement that, among other things, proposes a funding schedule in respect of the pension plan for the period specified in the agreement.

• Marginal note:Exception

  (2) The proposed funding schedule may not provide for payments that become due before the day on which the negotiation period begins or that relate to normal cost.

• Marginal note:Termination

  (3) A workout agreement may not be entered into in respect of a pension plan that has been terminated in whole.

Marginal note:Information to be provided to members and beneficiaries

• 29.2 (1) The members and beneficiaries must be provided with the prescribed information regarding the proposed workout agreement within the prescribed period by their respective representatives or, if the representative agrees, by the employer.

• Marginal note:Consent of representatives

  (2) A representative who is not a bargaining agent may consent to a proposed workout agreement only if less than one third of the members or beneficiaries that they represent object to the agreement within the prescribed period.

• Marginal note:How objections are counted

  (3) Any objection expressed by a representative on behalf of the members or beneficiaries that they represent is to be counted as a separate objection for each person that they represent.

Marginal note:Approval by Minister

• 29.3 (1) The proposed funding schedule may take effect only if it is approved by the Minister, on the request of the employer and the representatives who consent to the proposed workout agreement.

• Marginal note:Objections

  (2) The request for approval of the funding schedule may be submitted to the Minister only if less than one third of the members and less than one third of the beneficiaries object to the proposed workout agreement within the prescribed period.

• Marginal note:Request for approval

  (3) A request for approval must be submitted within the prescribed period and must be accompanied by

  • (a) a copy of the proposed workout agreement signed by the employer and the representatives that consent to it;

  • (b) the funding schedule in the form that the Superintendent directs;

  • (c) a written statement from each representative who consents to the proposed workout agreement or the employer, as the case may be, confirming that the requirements set out in subsection 29.2(1) have been met;

  • (d) a written statement in which the employer confirms that the requirement set out in subsection (2) has been met; and

  • (e) any prescribed documents or information.

• Marginal note:Conditions

  (4) The Minister may approve the funding schedule only if, in the Superintendent’s opinion, it complies with the regulations made under subparagraph 39(1)(n.1)(v). In deciding whether or not to approve the funding schedule, the Minister must consider the prescribed criteria and any other matter that the Minister considers relevant.

• Marginal note:Notification of decision

  (5) The Minister must notify the Superintendent, employer, administrator and representatives of the decision and, if the funding schedule is approved, must provide the Superintendent with a copy of the schedule.

• Marginal note:Effect of approval

  (6) On approval by the Minister, the funding schedule is, for the purposes of this Act — except section 38 — and the regulations, considered to be part of the prescribed tests and standards for solvency in respect of the pension plan in question.

• Marginal note:Inconsistency

  (7) In the event of an inconsistency between the approved funding schedule and the provisions of the regulations, the funding schedule prevails to the extent of the inconsistency.