The Financial Services Commission of Ontario has issued guidelines to the pension industry on the implications of the Supreme Court of Canada decision in the Monsanto Canada Inc. case.

That decision, released July 29, confirmed that the Ontario Pension Benefits Act requires the distribution of pension plan surplus on both full and partial wind-up of a pension plan.

FSCO says that, in Ontario, this means, “all pension plans that undertake a partial plan wind-up must distribute any surplus that relates to the partial wind-up group as part of the partial wind-up process.

“The actual treatment of the surplus, including any surplus distribution, must be in accordance with the terms of the pension plan and the requirements of the PBA.”

Since the Supreme Court decided to hear the Monsanto appeal, FSCO has been reviewing all pension policies related to wind-up, partial wind-up and surplus. It says that a list indicating the status of the policy review process will be available shortly.

In the meantime, it outlines the implications of the decision for plans that have already filed partial wind-up reports. In cases in which the report stated there was no surplus at the effective date of the partial wind up, the filing was complete and any outstanding questions were resolved, Superintendent approval of the partial wind up report was granted. With the distribution of the assets, the partial wind up is complete.

For plans for which the report indicated a surplus at the effective date of the partial wind-up and approval of the partial wind-up report was granted, with the distribution of the assets, the partial wind up is complete.

In more contentious cases, such as those in which a hearing before the Financial Services Tribunal in respect of a partial wind-up has been on hold pending the outcome of the Monsanto appeal, the hearing may now proceed at the request of a party to the hearing.

For plans in which the report indicated a surplus, but no proposal for the distribution of the surplus was filed or approved, the Superintendent did not approve the partial wind-up report, but provided approval to distribute the basic benefits once all benefit-related issues were resolved. Further filings to update the partial wind-up report and deal with the surplus related to the partial wind-up group are now required, it says. Letters providing details of the filings required will be mailed to the affected plan administrators by Aug. 29. Any affected plan administrator who does not receive a letter should contact FSCO.