A British Columbia court has rejected an effort to challenge a pension plan raising its normal retirement age in an effort to address funding concerns.
Members of the B.C. Credit Union Employers’ Pension Plan sought to oppose the pension trustees’ decision to increase the plan’s normal retirement age to 65 from 62 years.
They also alleged that the trustees failed to warn the plan’s members about the solvency deficit that motivated that decision.
According to the decision of the B.C. Supreme Court, the plan’s trustees decided to raise the normal retirement age, effective Jan. 1, 2017, in response to concerns about the plan’s funding status.
The plaintiffs alleged that, in doing so, the trustees breached their fiduciary and other duties to the plan’s members.
Among other things, the plaintiffs argued that the decision to raise the retirement age was based on “outdated and inaccurate financial projections,” and that it favoured the interests of the credit unions that participate in the plan over the plan members.
“The essence of the plaintiffs’ claim is that the trustees acted unreasonably in basing their decision to change the normal retirement date [upon] irrelevant and improper considerations,” the decision noted.
However, the court found the plaintiffs failed to establish grounds for the court to interfere with that decision, saying that trustees considered actuarial and legal advice when weighing options for addressing the plan’s solvency concerns.
“There is no basis for finding that any of these factors were irrelevant, improper or irrational,” the court said.
The plaintiffs also alleged that the decision to raise the retirement age, rather than sharply increasing employer contributions, favoured the credit unions that participate in the plan over the interests of the plan members (current and former credit union employees).
However, the court found that the trustees were right to consider concerns that hiking contribution rates could cause employers to withdraw from the plan.
“This is a relevant and proper factor to consider as it impacts the long-term financial viability of the plan, which is a core concern for the trustees,” the court said.
While the plaintiffs disagreed with the trustees’ decision, the court found that “they have not established that the decision was one that ‘no reasonable body of trustees properly directing themselves could have reached’.”
“The plaintiffs have therefore failed to establish any grounds upon which the court could interfere with the trustees’ decision,” it concluded.
The court also rejected claims that the trustees breached their duty to warn the plaintiffs about the plan’s solvency issues and the potential increase to the normal retirement date.