Metropolitan Toronto Pension Plan Surplus
Koskie Minsky LLP has been retained by a group of retired members of the Metropolitan Toronto Pension Plan (the “Plan”) to assist them in the negotiation of a surplus sharing agreement in respect of the Plan, between the City of Toronto and Plan members, and to advise Plan members regarding a proposed merger of the Plan with the Ontario Municipal Employees’ Retirement System (“OMERS”). This group, the Pension Committee for the Metropolitan Toronto Pension Plan Surplus Distribution (the “Committee”), is comprised of three Plan members, Wes Rowe, Paul Enright and John Walford.
As Plan members may be aware, the City of Toronto (the “City”) has decided to merge the Plan with OMERS. If this merger proceeds, members’ pensions will be protected, and they will continue to receive their monthly benefit from OMERS, but with the added benefit of guaranteed cost of living increases. In addition, because the Plan is very well funded, there will likely remain substantial assets in the Plan following this merger (referred to herein as “surplus”), which will have to be distributed.
The Committee has negotiated and signed an agreement in principle (the “Proposal”) with the City, effective January 31, 2018. Details regarding the Proposal are set out in a package mailed to Plan members on February 23, 2018. Plan members are encouraged to attend one of three meetings being held in the Greater Toronto Area, on March 19, March 20 and April 10, details of which are included in the member information packages, to obtain further information.
The key provisions of the Proposal include the following:
- assets and liabilities of the Plan will be transferred to OMERS, which will continue to pay pensions, including guaranteed cost of living increases;
- following a proposed transfer of assets of the Plan to OMERS, remaining surplus in the Plan will be shared on a 50/50 basis between Plan members and the City;
- expenses incurred by the City in negotiating and implementing the Proposal will be deducted from the City’s share of surplus, while expenses incurred by the Committee in negotiating and implementing the Proposal will be deducted from the Plan members’ share; and
- each Plan member’s share of surplus will be determined with reference to the value of the member’s monthly pension, subject to a minimum payment of $2,500.
The Proposal is subject to a number of conditions, most importantly the following:
- at least 75% of Plan members must vote in favour of the Proposal, by no later than May 15, 2018; and
- the Proposal cannot proceed if the Plan does not merge with OMERS.
Plan members who support the Proposal are encouraged to complete the Authorization and Retainer Form contained in their information package and return it to Koskie Minsky prior to May 15, 2018.
Plan members who have any questions regarding the Proposal can contact Koskie Minsky either by telephone or email, details of which are set out under the “Contacts” tab below.
-
Latest Developments
-
April 16, 2021
We are pleased to advise that the Chief Executive Officer of the Financial Services Regulatory Authority (“FSRA”) has issued a consent to the distribution of surplus from the Metropolitan Toronto Pension Plan (the “Metro Plan”), a copy of which can be accessed here.
Now that the required regulatory approvals have been received, the City of Toronto is in a position to implement the Surplus Sharing Agreement between the City and Plan members, and we are advised that payments to members should begin by the end of April 2021.
-
March 9, 2021
We are pleased to advise that on March 8, 2021, the CEO of the Financial Services Regulatory Authority (“FSRA”) issued a Notice of Intended Decision (“NOID”), proposing to consent to the distribution of surplus from the Metropolitan Toronto Pension Plan (the “Plan”), in accordance with the terms of the surplus sharing agreement between Plan members and the City. A copy of the NOID can be accessed here.
The CEO of FSRA will issue a formal Order within 30 days approving the distribution unless there are any objections. If there are objections then the objectors must request a hearing before the Financial Services Tribunal. We do not anticipate any objections and expect that the distribution will follow commencing in April or May of 2021. The City of Toronto will also be providing eligible Plan members with a letter advising them of their estimated share of surplus.
We will be posting further updates to this website as soon as further information is known regarding the final approval of the surplus distribution, and the timing for surplus distribution.
-
August 25, 2020
We are pleased to report that this matter is proceeding to the final regulatory approval stage. On August 20, 2020, the City of Toronto served its Notice of Employer Surplus Withdrawal Application (the “Notice”) on Koskie Minsky LLP (“KM”), in its capacity as counsel to members of the Metropolitan Toronto Pension Plan (the “Plan”) surplus sharing group who retained KM to represent them in this matter. A copy of this Notice can be found by clicking this link.
As is set out in the Notice, the City of Toronto is proceeding to file a Surplus Withdrawal Application with Ontario’s pension regulator, the Financial Services Regulatory Authority of Ontario (“FSRA”), and we are advised that this important step was completed on August 21st, 2020. At the same time, the City of Toronto also filed an actuarial valuation report on the wind-up of the Metro Plan.
As the City of Toronto reported to you in its letter of March 23, 2020, FSRA previously indicated that it will prioritize its review of the application. We will shortly be writing a letter to FSRA to encourage the prioritization of FSRA’s review. It is, however, important to note that the timing of any surplus distribution depends both on the length of time required for the applicable regulatory approvals, as well as any potential hearing requests to the Ontario Financial Services Tribunal, should any members of the Metro Plan object to the proposed distribution. In addition, despite previously communicated timelines, the regulator’s review may also be impacted by Ontario’s existing emergency order in response to COVID-19.
We will continue to post periodic updates to this website to keep members advised as this matter proceeds.
-
January 8, 2020
We are pleased to advise that the Financial Services Regulatory Authority (“FSRA”) has issued an order approving the merger of the Metropolitan Toronto Pension Plan (the “Metro Plan”) with the Ontario Municipal Employees’ Retirement System (“OMERS”). This significant step is a precondition to any distribution of surplus from the Metro Plan.
We are advised that members of the Metro Plan will shortly be receiving a welcome package from OMERS, likely during the week of January 13, 2020, and that pension payments from OMERS will begin effective February 2, 2020.
A number of further regulatory steps are required before any surplus can be distributed to Metro Plan members, including the following:
- a wind-up report for the Metro Plan must be filed and approved by the provincial regulator; and
- a formal surplus withdrawal application must be filed and approved by the provincial regulator.
We will continue to post periodic updates on this website to keep members advised as this matter proceeds.
-
May 25, 2018
We are pleased to report that, as of May 15, 2018, approximately 83% of eligible Plan members or their surviving spouses voted in favour of the Proposal, and as such, the next steps required for the implementation of the Proposal can proceed. The first step, the execution of a formal Surplus Sharing Agreement (the “SSA”) to document the Proposal, has been completed, as required under the terms of the Proposal.
The next significant step required to implement the SSA is the merger of the Plan with the Ontario Municipal Employees’ Retirement System (“OMERS”). Later this summer, the City will be sending you a package containing important information regarding the proposed merger. You should review the package, but no further action on your part will be necessary if you agree with the proposed merger. It is important to note that the merger is subject to the approval of the Superintendent of Financial Services of Ontario (the “Superintendent”), and if the merger does not proceed, no surplus can be distributed from the Plan in accordance with the terms of the SSA.
If the merger proceeds, following the completion of the merger, the City will proceed to wind up the Plan and file an application with the Superintendent for approval of the SSA. Surplus from the Plan cannot be distributed in accordance with the terms of the SSA unless and until the Superintendent has approved the surplus withdrawal application. At this time, we do not expect surplus from the Plan to be distributed before the end of 2019, at the earliest.
-
April 30, 2018
We are pleased to advise that, as of today’s date, we have received Authorization and Retainer forms from approximately 75% of eligible members, as required under the terms of the surplus sharing proposal (the “Proposal”). While we have reached the required threshold under the terms of the Proposal, members who have not yet submitted their Authorization and Retainer forms are encouraged to do so, as we will continue to accept these forms beyond May 15, 2018.
A number of further conditions are required in order for the Proposal to be implemented, including the following:
- Completion of the merger with OMERS; and
- Regulatory approval for the surplus distribution, as contemplated under the Proposal.
We do not expect the surplus to be distributed from the Plan prior to the end of 2019, at the earliest. We will continue to post periodic updates to this website to keep members advised as this matter proceeds.
-
April 17, 2018
We have now completed our information sessions, which were well attended. As of today, we have received Authorization and Retainer forms from approximately 65% of Plan members. While we are pleased with this result, it is insufficient under the terms of the Proposal to proceed, and as such, Plan members who have not voted in favour of the Proposal by submitting their Authorization and Retainer forms are encouraged to do so as soon as possible. As a reminder, we must receive the support of at least 75% of Plan members by no later than May 15, 2018 in order to proceed.
-
February 26, 2018
Plan members are encouraged to attend one of the following information sessions, where they will have an opportunity to ask questions of the Committee and their legal and actuarial advisors. A representative of the City of Toronto will also be present to answer your questions. To view a copy of the presentation from the information sessions (PDF), please click here.
Monday, March 19, 2018 Markham, ON
10:00 a.m.Hilton Toronto/Markham Suites Conference Centre & Spa
8500 Warden Avenue
Markham, ON L6G 1A5
Conference Centre 1 & 2Tuesday, March 20, 2018 North York, ON
2:00 p.m.Montecassino Hotel & Event Centre
3710 Chesswood Drive
North York, ON M3J 2W4
Salon CTuesday, April 10, 2018 Markham, ON
2:00 p.m.Hilton Toronto/Markham Suites Conference Centre & Spa
8500 Warden Avenue
Markham, ON L6G 1A5
Markham Ballroom
-
April 16, 2021
-
FAQS
Frequently Asked Questions Regarding the Surplus Sharing Proposal
Updated March 13, 2018
- Will this proposal affect the pension I am receiving?
No. You will continue to receive the same amount of pension you are currently receiving if the Proposal proceeds – you will just receive it from the OMERS plan, rather than from the existing Plan. In addition, you will benefit from the annual guaranteed cost of living adjustments under the OMERS plan. Your current cost of living adjustments are not guaranteed. You will also receive a payment of surplus under the proposal.
- Why is the surplus being shared 50/50 with the City?
Plan members cannot force the City to distribute surplus from the Plan. Without a negotiated deal, the City will not proceed with the proposed merger, and there will be no distribution of surplus to Plan members. The proposed split represents a fair compromise arrived at through negotiations.
- Will this Proposal and the merger with OMERS affect my other post-retirement benefits, such as health insurance?
No – your other post-retirement benefits (such as health and dental benefits) will not be affected if the Proposal and the merger with OMERS proceeds. They will continue under the current terms.
- What will happen if the Proposal doesn’t proceed?
If the Proposal doesn’t proceed, Plan members will continue to receive their pension from the Plan, the proposed merger won’t proceed, and the surplus will remain in the Plan, and may never be distributed.
- Will I be responsible for legal fees if the Proposal doesn’t proceed?
No. Plan members will not be individually asked to pay Koskie Minsky’s fees. Legal fees will be paid from the pension plan.
- How will the surplus payment be made if the Proposal proceeds?
If the Proposal proceeds, payments will be made to Plan members in a single lump sum payment, less applicable withholding taxes.
- What are the tax implications of a surplus payment?
Surplus payments from a pension plan are taxable, and if the Proposal proceeds, taxes will be deducted from your surplus payment.
- How long will it take for Plan members to receive their surplus payments if the Proposal proceeds?
It is very difficult to predict how long it will take to obtain the necessary regulatory approvals and finalize the distribution, if the Proposal moves ahead. This is because two separate applications will have to be approved by the pension regulator; namely, an asset transfer application to approve the merger with OMERS, and subsequently, a surplus withdrawal application. As such, we do not expect that distributions will take place prior to the end of 2019, at the earliest.
-
Contacts
Telephone: 416-977-8383
Email: contactus@kmlaw.ca