Canada High Court Takes on Pension Case

January 31, 2008 ( - The Supreme Court of Canada has agreed to hear an appeal of a key pension decision that was seen as favorable to plan sponsors.

A Business Insurance report said Canada’s high court accepted an appeal of the Kerry (Canada) Inc. vs. DCA Employees Pension Committee decision, in which the Ontario Court of Appeal overturned a divisional court ruling challenging several common pension plan management practices (See Former Canadian Employees Appeal Plan Expenses Decision ).

In the June 2007 decision, the appellate court ruled that the divisional court erred in finding that the company was not allowed to pay expenses from the fund because there was no statutory requirement that the employer pay the expenses. The plan documentation did not prohibit the payment of expenses from the fund, except those paid to trustees, according to the report.

The Court of Appeal also said Kerry (Canada)’s decision to introduce a defined contribution component to its plan did not create two separate plans. That overturned the divisional court’s ruling that the amendments created two plans and that use of surplus DB funds to pay DC contributions was impermissible.

“It’s a decision that has a wide-ranging impact, so it doesn’t strike me as odd that the Supreme Court would deal with it,” Ronald Walker, a senior partner in the litigation group of Fasken Martineau in Toronto, told Business Insurance. The firm represents Kerry (Canada) in the case.