Appeals Court Rules that Pension Plan Members Not Entitled to Indexing
By Mark Newton
In a recent decision, the Saskatchewan Court of Appeal ruled that members of the Saskatchewan public service pension plan are not entitled to indexed pension benefits, beyond what was already provided for in legislation.
The plaintiffs who were representative plaintiffs in a class action on behalf of members of the defined benefit pension plan, alleged that the government of Saskatchewan had breached employment contracts with its employees and had also breached its fiduciary duties toward the members in failing to fully index the pensions payable from the plan.
The plaintiffs argued that the government had promised to treat the members of the plan “equitably and fairly, having regard to other employees of the government and its Crown corporations”, which arguably included providing fully indexed pensions. The trial judge held against the plan members, because they had not established a contractual right or a breach of fiduciary duties by the government.
The Court of Appeal agreed with the trial court’s findings. The plaintiffs could not point to any specific written document that granted a right to additional indexation. The court found that they “were able to describe their sense of the ‘implied term’ only in the broadest of language”.
This case illustrates that a “pension promise” can be derived from many sources. Plan members will naturally seek to assert a case based upon the most favourable wording and in the case of ambiguity or inconsistency between pension documents or information, courts will often resolve the ambiguity or inconsistency in favour of the plan members.
For more on May et al. v. Government of Saskatchewan and its implications for employers, administrators, and actuaries, see our Fl@sh Bulletin.