Toronto Civic Employees’ Pension Plan Surplus

• June 26, 2020

  We are pleased to report that this matter is proceeding to the final regulatory approval stage.  On June 25, 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 Civic 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 has been completed today (June 26, 2020).  At the same time, the City of Toronto also filed an actuarial valuation report on the wind-up of the Civic Pension Plan.

  As the City of Toronto reported to you in its letter of March 23, 2020, FSRA has indicated that it will prioritize its review of the application, and we are hopeful that approval for the application will be issued by the regulator by the end of August, 2020, following which surplus distributions to Civic Plan members may proceed.  We will shortly be writing a letter to FSRA to encourage the prioritization of FSRA’s review.  It is, however, important to note that this timing could change, both depending on the actual length of the regulatory review, as well as any potential hearing requests to the Ontario Financial Services Tribunal, should any members of the Civic 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.

• October 4, 2019

  We are pleased to advise that the Financial Services Regulatory Authority (“FSRA”) has issued an order approving the merger of the Toronto Civic Employees’ Pension Plan (the “Civic Plan”) with the Ontario Municipal Employees’ Retirement System (“OMERS”).  This significant step is a precondition to any distribution of surplus from the Civic Plan.

  We are advised that members of the Civic Plan will shortly be receiving a welcome package from OMERS, in mid to late October, 2019, and that pension payments from OMERS will begin in November, 2019.

  A number of further regulatory steps are required before any surplus can be distributed to Civic Plan members, including the following:

  • a wind-up report for the Civic 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 80% 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 71% 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.

  Tuesday, March 20, 2018
  Toronto, ON 10:00 a.m.	Marriott Downtown at CF Toronto Eaton Centre 525 Bay Street Toronto, ON  M5G 2L2 Salons 1 – 3
  Tuesday, April 10, 2018
  Toronto, ON 10:00 a.m.	DoubleTree by Hilton Hotel Toronto Downtown 108 Chestnut Street Toronto, ON  M5G 1R3 Toronto/Victoria Ballroom

   

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Frequently Asked Questions Regarding the Surplus Sharing Proposal

Updated March 13, 2018

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

 

Toll Free Hotline: 1-855-595-2625

Email: torontocivicpension@kmlaw.ca