The ruling by the appeals court struck down a lower court decision that would have given administrators additional responsibility to disclose plan information, according to reports by Business Insurance. In Hembruff vs. Ontario Municipal Employees Retirement Board , the Ontario Court of Appeal had ruled that the plan administrator had no duty to advise plan members that it was contemplating making benefit improvements to the pension plan.
The case was initially brought by eight employees who resigned from their positions with the Toronto Police Board and subsequently withdrew the commuted values of their pensions for the Ontario Municipal Employees Retirement System. They claimed the Board did not keep them informed about the state of their benefit enhancements. The lower court sided with six of the plaintiffs and agreed that the board breached its fiduciary duty.
The appeals court overturned the decision and the Supreme Court of Canada’s decision not to hear the case means the Court of Appeal’s decision stands.
The appeals court ruling written by Justice Eileen Gillese says that disclosing every consideration could lead to undue work for administrators and ambiguity for members if they must be notified of all plan change considerations.
class=”headingnumber”> “ If potential plan changes were announced but subsequently modified or discarded as the result of further input, administrators could be faced with unhappy members who had relied to their detriment on the earlier announcement,” Gillese wrote in her opinion. “It would not have been reasonable for a member to rely on information that was clearly subject to the consultation process and, therefore, to change,” she continued.