Pensions

Interim Measures Regarding the Statutory Early Retirement Regime

Until 30 December an employee can benefit from the statutory early retirement regime when she/he has reached the age of 60 and has had a career of at least 35 years. The Act of 28 December 2011 provides for a gradual change in these conditions as from 1 January 2013 (see also our Newsletter of 13 January 2012 (in Dutch)). Hereunder we will summarize the most important transitional measures.

Workers whose notice period started before 1 January 2012 and ends or should have ended after 31 December 2012 can go on early retirement if they have reached the age of 60 and have a career of at least 35 years. A copy of their notice letter has to be attached to their application for the early retirement pension.

Continue Reading...

What's New in Employment Law This April and Beyond?

By Richard Lister

BarometerII.jpgIt is official policy in the UK for most changes to employment legislation to take effect in either April or October each year. This article summarises both the reforms coming into force this month and the major Government proposals for the future currently stacked up in the pipeline.

The most noteworthy changes being implemented in April 2012 are as follows:

Unfair Dismissal Qualifying Period

In a highly controversial reform that was confirmed by the Government last October, the period of employment before an employee qualifies for the right to claim unfair dismissal has increased from one to two years. This applies only to employees who start a new job on or after April 6, 2012: employees already in employment on that date retain the one-year qualifying period.

Continue Reading...

Italian Labour Reform: What Will the New Year Bring?

By Valeria Morosini of Toffoletto De Luca Tamajo e Soci (the Italy member of Ius Laboris)

On the 27th December 2011, a new law that will greatly reform certain aspects of Italian labour law was published in the Italian official gazette. The law will enter into force at the beginning of the new year and will bring major changes to company tax deductions and pensions.

Starting in January 2012, companies will receive tax deductions as a reward for employing workers under the age of 35 and female employees; these two groups make up the largest percentage of unemployed persons in Italy. However, the biggest change will come in the area of pension reform.

Continue Reading...

Canadian Association of Pension Supervisory Authorities Releases Pension Plan Governance Guidelines

On November 15, 2011, the Canadian Association of Pension Supervisory Authorities (CAPSA) released two Guidelines on pension plan governance. These Guidelines outline the expectations relating to the investment of pension plan assets, as well as best practices when developing and adopting a funding policy for pension plans that provide defined benefits.

Guideline No. 6: Pension Plan Investment Practices Guideline provides a variety of prudent investment principles that plan administrators should bear in mind when managing investments. In this Guideline, CAPSA encourages plan administrators to assess their current investment practices to ensure prudent practices are in place. The focus of the Guideline is to ensure that plan administrators have a robust, process-oriented decision-making framework in place within which investment management activities are conducted.

Continue Reading...

Employment Must Terminate to Obtain Pension

Starting from 1 January 2011, in order to obtain a pension one must terminate current employment. Until the end of 2010, it was possible to obtain a pension without terminating employment. Now, the pension will not start to be paid until employment is terminated. Employees who have terminated their employment and who have started to receive pension payments may take up new employment, even with the same employer and their pensions will continue to be paid. Of course, the employer is under no obligation to take the employee back. Employees who were employed and simultaneously were receiving pension at the date when the new regulation came into force will retain the right to the pension until the end of September 2011. By that time they must terminate their employment, even for a short period of time, or the payment of their pension will be discontinued.

Court of Justice Deems the Use of Gender as a Risk Factor in Insurance Contracts Incompatible with European Fundamental Rights

On 1 March 2011, the European Court of Justice rendered its judgement in the Test-Achats case. In a landmark ruling, the Court bans the common practice in the life insurance market to apply gender differences in premiums and benefits based on underlying actuarial and statistical data. According to the Court, as of 21 December 2012, unisex premiums and benefits should be the one and only norm.

Directive 2004/113/EC aims to combat discrimination based on sex in access to and supply of goods and services. Article 5 of the Directive prohibits in principle the use of sex as a factor in calculating insurance premiums and benefits as of 21 December 2007. Yet the same article provided for an exception to this general rule. Member States could allow exceptions to the rule of unisex premiums and benefits in so far as the use of sex was a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. By 21 December 2012, the Members States were to ascertain whether these exceptions were still justified. Belgium made use of this possibility to allow the continuous use of actuarial data based on sex in life insurance policies (third pillar).

Continue Reading...

Ontario Government Says Pension Reform Must Include Expanding the Canada Pension Plan

The Ontario government has released a consultation paper calling for pension reform by, among other things, expanding the Canada Pension Plan and the Quebec Pension Plan (C/QPP). The paper outlines three possible enhancements to the C/QPP:

  • Increase the income replacement rate from 25% of year's maximum pensionable earnings ("YMPE") to 35%;
  • Increase the $47,000 YMPE earnings ceiling by 50% or 100%; and
  • Increase both the income replacement and the YMPE earnings ceiling.

The paper argues that expanding the C/QPP is justified because the income levels of retirees will not be adequate in the future as fewer employees in the private sector participate in pension plans and employees are not taking advantage of existing contribution room in RRSPs and tax-free savings accounts.

For more information, please see Heenan Blaikie's Pension Pulse "Securing the Future = Expanding the CPP: Ontario Government Releases Consultation Paper" (pdf).

Significant Decisions in Workplace Law in 2010

RecentDevelopmentsInWorkplaceLaw-October2010.jpg In the last year, Canadian courts have tackled a wide range of legal issues that are relevant to employers. To keep employers up to date on developments in the law, Heenan Blaikie's national labour and employment law practice has prepared a paper entitled "Recent Developments in Workplace Law" (pdf) which provides an overview of recent developments in employment, human rights, pensions, labour, workplace privacy, and occupational health and safety law.

Canada's Top Court Rules Pension Plan Members Have No Entitlement to Surplus

The Supreme Court of Canada has ruled that pension plan members have no entitlement to surplus funds in their employer's pension plan. While the decision is based on particular facts, the court made far-reaching statements that will be of interest to all employer sponsors and administrators of defined benefit pension plans, whether their plans are in surplus or in deficit.

In Burke v. Hudson's Bay Co. (pdf), the Hudson's Bay Company (HBC) sold its Northern Stores Division to the North West Company. As part of the sale, a number of HBC employees transferred to North West. HBC transferred enough assets from its pension fund to cover the transferred employees' defined pension benefits, but did not transfer any surplus assets. HBC and North West had discussed whether a portion of the plan's surplus should be transferred, but this would have increased the purchase price and both parties agreed not to transfer any surplus assets. The issue before the court was whether HBC had an obligation to transfer a proportionate share of the surplus assets to North West for transferred employees. The Court confirmed that HBC was a fiduciary as administrator of its pension plan, but rejected the argument that as a fiduciary, it had a duty of even-handedness in the handling of the surplus assets that required it to transfer a share of the surplus. The Court held that the duty of even-handedness did not require HBC to confer benefits on transferred employees that they were not otherwise entitled to under the terms of the pension plan documents. Based on a review of plan documents in this case, the Court found that the members of the HBC pension plan had no current or future interest in the surplus assets and therefore, their claim to a portion of the surplus necessarily failed.

Continue Reading...

Ontario Government Announces Phase 2 of Pension Reform

The Ontario government has released a backgrounder outlining proposed measures for Phase 2 of its pension reform agenda.  The proposed reforms would add another layer of restrictive rules on private sector defined benefit pension plans and introduce favourable rules for pension plans in the broader public sector.

Continue Reading...