Eastern Canada Car Carriers Pension Plan (ECCC Plan) - OSFI Registration number 55183
Canadian Auto Carriers & Logistics Pension Plan (CACL Plan) - OSFI Registration number 57692
The Office of the Superintendent of Financial Institutions (OSFI) would like to provide members of the ECCC Plan and the CACL Plan with information related to the request for permission to transfer assets from the ECCC Plan to the CACL Plan and the decision by the ECCC Plan Trustees to terminate the ECCC Plan.
Request for permission to transfer assets from the ECCC Plan to the CACL Plan
The Superintendent’s permission is required before the assets related to the defined benefit provisions of a federal pension plan can be transferred to another plan. In October 2010, the ECCC Plan Trustees submitted a request for permission to transfer the assets and related liabilities of the former Teamsters members from the ECCC Plan to the CACL Plan effective June 30, 2010. Before this request could be considered, the CACL Plan needed to be registered by the Superintendent and the Trustees of both plans needed to agree on the terms of the transfer of assets, including the amount of assets to be transferred. The Superintendent registered the CACL Plan on December 22, 2011 and OSFI received the signed Pension Transfer Agreement in December 2012, outlining the terms of the transfer of assets. As noted below, the request for permission to transfer ECCC Plan assets has recently been withdrawn.
While this request was under review by OSFI, the CACL Plan faced significant challenges and uncertainty, notably when its largest participating employer, Allied Systems (Canada) Limited, filed for bankruptcy protection in June 2012. The situation appeared to improve when Jack Cooper Transport, following its purchase of Allied Canada, confirmed to OSFI in May 2014 that it would continue to participate in the CACL Plan. As a result, OSFI continued its consideration of the request and the CACL Plan sent additional information to members affected by the proposed transfer.
However, in January 2016, OSFI was advised of anticipated lay-offs by Jack Cooper Transport and Auto Warehousing Co.; lay-offs that could be expected to materially reduce the active membership of the CACL Plan going forward. These changes in the CACL Plan’s membership, as well as differences in the financial positions of the ECCC and CACL Plans, renewed OSFI’s concerns. In February 2016, OSFI staff informed the Trustees of both plans that it would only be prepared to recommend that the Superintendent permit assets to be transferred from the ECCC Plan to the CACL Plan for those members who individually consented to the transfer.
OSFI understands that the Boards of Trustees of both Plans, after careful consideration of the options available, came to the view that it was in the best interest of their members to withdraw the request for permission to transfer the assets. OSFI has been informed that the ECCC Plan Trustees will proceed with the termination and winding-up of the ECCC Plan.
Termination of the ECCC Plan
The ECCC Board of Trustees will choose a termination date for the Plan and have a Termination Report prepared showing, among other things, how the assets of the Plan will be used to pay pension benefits and the expenses related to terminating the Plan. The Termination Report must be submitted to the Superintendent for approval.
Given the circumstances applicable to the ECCC Plan and the delays that have occurred in relation to the recently withdrawn request for permission to transfer assets to the CACL Plan, OSFI has advised the Trustees of both plans that its review of the Termination Report will be treated as a priority. We expect our review to be completed within three months of receiving a complete application for approval of the ECCC Plan’s Termination Report, provided that no changes are required to be made to the Report following our review.
While the Termination Report is under review, the ECCC Plan Trustees can continue to pay retirees monthly pensions, and any member who is entitled to retire can commence their monthly pension from the plan. However, lump-sum payments (such as to transfer a member’s funds to another pension plan or to a locked-in retirement savings plan), cannot be made from the ECCC Plan until the Termination Report has been approved by the Superintendent. Within 120 days of the ECCC Plan’s termination, the ECCC Plan administrator will provide members, former members, and their spouses and common-law partners with detailed termination statements including their benefit entitlements and options.
Implications of the current funded status of the ECCC and CACL Plans
The ECCC Plan’s latest actuarial report, dated December 31, 2015, shows that the estimated funded position assuming the ECCC Plan terminated on that date was 92%. This means that if the ECCC Plan had terminated on December 31, 2015, the Plan would not have had sufficient assets to cover its liabilities. Therefore, ECCC members should expect to receive less than their full benefits when the ECCC Plan terminates.
The CACL Plan’s latest actuarial report, dated December 31, 2015, shows that as a result of the Jack Cooper Transport and Auto Warehousing Co. layoffs in 2016, the level of contributions made to the CACL Plan are not expected to be sufficient to cover the funding requirements. Therefore, the CACL Plan Trustees must decide how to address the contribution shortfall, which is estimated to be about $31,000 in 2016. Given that contributions are fixed in accordance with collective agreements, it is possible that benefits will need to be reduced. As mentioned in the June 2016 CACL Insider newsletter sent to members, the CACL Plan Trustees are looking at options to address the issue.
Restrictions on portability in the ECCC and CACL Plans remain in place
The Superintendent has taken steps in the past to protect the rights and interest of all plan members by imposing restrictions on the transfer of members’ pension benefit credits out of the ECCC and CACL Plans in order to prevent the transfers from impairing the financial situation of the plans. The restrictions imposed on the ECCC Plan in 2006 and on the CACL Plan in 2011 will remain in place until the ECCC Plan submits and obtains approval of their Termination Report and until the CACL Plan Trustees have addressed the CACL Plan contribution shortfall, as mentioned above. OSFI will continue to monitor both the ECCC and CACL Plans closely.
Questions on member benefits should be addressed directly to the Plan administrators of the ECCC and CACL Plans.