The Voice of Multi-Employer Plan Interests in Canada



The Multi-Employer Benefit Plan Council of Canada (MEBCO)

MEBCO was established in 1992 to represent the interests of Canadian multi-employer pension and benefit plans (MEPs) with provincial and federal governments regarding proposed or existing legislation and policies affecting these plans. MEBCO is a federal no-share capital corporation, operating on a not-for-profit basis.

MEBCO is representative of all persons and disciplines involved in MEPs, including union and employer trustees, professional third party administrators, non profit or “in-house” plan administrators, professionals including actuaries, benefit consultants, lawyers and chartered accountants. MEBCO is administered by a Board of Directors consisting of representatives from each of the above groups.

Background of MEPs

Over the past quarter-century labour and management have joined together to develop a response to the problem of delivering quality health services and retirement plans to workers and their families in industries typified by small companies and a mobile work force. There are hundreds of MEPs in Canada covering well over 1,000,000 workers and their families in industries as diverse as building and construction, food, service, retail, hotel and restaurant, graphic arts, garment manufacturing, security, textiles, transportation and entertainment. A single MEP may be national, regional, provincial or local in coverage. Anywhere from 2 to over 1,000 employers may contribute to a single MEP pursuant to several collective agreements.

Collective agreements negotiated by one or more unions establish MEPs and the contributions necessary to finance and provide benefits under these plans. MEPs are “Trust Funds” and are generally administered by a joint board of trustees, comprised of an equal number of trustees appointed by the union(s) and the employer. Theses trustees are responsible for receiving contributions from employers, paying certain benefits directly to members and their dependents and entering into insurance contracts for the provisions of other benefits. In the event that an employer is delinquent in making contributions, the trustees pursue collection proceedings.

MEBCO is concerned about a recent RRQ staff interpretation of the Québec Supplemental Pension Plans Act (SPPA), Section 146, that, to MEBCO’s knowledge, has never been applied to MEPP employers subject to the SPPA.  The text of that Section is:

146. The balance of the value of the benefits which, under the terms of sections 143 to 145.1, cannot be paid must be funded and paid within five years after the date of the initial payment or not later than the date on which the member concerned attains normal retirement age if that age is attained before the expiry of the five-year period. (emphasis added)

MEPPs have contributions that are fixed in multi-year collective agreements, typically as an amount per hour.  We understand that Régie staff have recently suggested that Section 146 imposes an obligation on employers participating in MEPPs to make an additional contribution each time a Québec participant terminates employment, elects to take a Transfer Value payment, and is required to defer receipt of a portion of that payment for up to five years.

Implementation of this interpretation of Section 146 by a MEPP entails a large number of important technical questions, which MEBCO is prepared to identify and discuss on request.  However, our most important concerns are:

Requiring an employer to contribute more than the obligation specified in its collective agreement runs contrary to basic principles of collective bargaining and may not be permissible under provincial labour laws.

By their very nature, MEPPs provide portability among all participating employers.  Therefore, it will often be impossible to allocate responsibility and collect from the many employers for whom a single employee worked.  Indeed, such employment may have been in multiple provinces, and there may be no equitable way to allocate the Transfer Value into Québec and non-Québec portions.

It would be inappropriate to allow an employer to cause a forfeiture of the deferred portion by its refusal to pay amounts beyond its bargained contributions.  Sec. 146 appears to link payment of the deferred amount to the employer’s actual funding.

Sec. 146 supplemental contributions would not be made pursuant to an actuary’s recommendation, and therefore may not be deductible under the Income Tax Act [ITA Reg. Sec. 8516(3)(a)(iii)].

This interpretation treats substantially identical circumstances differently.  For example, no additional contribution would be required if, using the small benefit rules, the full Transfer Value could be paid immediately, or if the participant chose to take a deferred annuity rather than a Transfer Value.  It is unlikely that the intent of the Legislature was to have different funding requirements based on cost-neutral choices made by individual participants.

Under the proposed multi-jurisdictional agreement, the funding requirements applicable to a MEPP are determined entirely by the rules of the province of registration – the “major authority.”  The italicized wording above is clearly related to funding (although Sec. 146 also refers to benefit provisions).  It would therefore appear that Sec. 146’s alleged extra funding requirement does not apply at all for a non-Québec-registered MEPP with Québec participants, but it applies to the non-Québec employers in a Québec-registered plan with non-Québec participants.  This raises significant questions that will certainly be litigated because that outcome makes no logical sense.

Sec. 146 appears to have been enacted with single employer plans in mind, and its provisions are consistent with the actuarial cost based contribution requirements applicable to such plans.  The Régie’s strained extension of Sec. 146 with respect to negotiated-contribution MEPPs is, in MEBCO’s view, inappropriate and administratively impractical and it should be withdrawn.


Joining MEBCO

Five reasons why your MEBCO membership is critical
Your MEBCO membership guarantees that multi-employer plan interests will be considered whenever change is on the horizon. With your support, MEBCO will continue to be a strong and effective voice. Join today!
  1. The threat to multi-employer plans is real.
    The legislative framework is constantly changing, and cost-management and cost reduction are at the top of every agenda.
  2. Legislative changes can be significant.
    Recent proposed changes have threatened to offload costs onto plans, restrict plan coverage, and have compromised the viability of some plans
  3. Multi-employer plans are worth protecting.
    Multi-employer plans play a vital role in providing health services and retirement plans to over 1 million workers and their families in industries typified by small companies and a mobile work force.
  4. Multi-employer plans need a united lobby.
    Multi-employer plans carry a low profile due to the fact that the coverage is thinly spread over many employer groups and mobile workers.
  5. MEBCO is committed to protecting your interests.
    When governments propose changes, MEBCO is the single, clear voice at the table representing the unique interests of multi-employer plans.