Legal challenge in respect to the Act to foster the financial health and sustainability of Municipal Defined Benefit Pension Plans (Bill 15)
On July 9th, the judgment regarding the application for the declaration of the unconstitutionality and invalidity was rendered by the Honourable Benoit Moulin, judge of the Quebec Superior Court.
You may recall, the purpose of this bill was to force the restructuring of all Municipal Defined Benefit Pension Plans. The changes made mandatory by virtue of this restructuring took effect on January 1, 2014 (please see our December 2014 publication on this subject [French only]):
The applicants argued that the bill violated the rights of freedom of association as well as active and retired members acquired benefits. The judge partially accepted the claims:
- He declares the articles of Bill 15 which allow a municipal body to suspend the automatic indexation of pensioners1 (articles 16 and 17 as well as the last sentence of the third paragraph of article 26) unconstitutional, invalid and inoperative.
- He dismisses the requests regarding other provisions of the Act concerning active members.
This decision is a first step in the legal process, and we may have to wait several years before knowing its outcome. Firstly, certain applicants have already indicated their interest in appealing the decision. Also, since the court split the proceedings between the constitutional questions and the claims for reparations, the latter will be addressed subsequently by the Quebec Superior Court.
We invite you to contact your SAI Consultant for more information regarding the judgment and its impact on your pension plan.
1 Retired members, for the purposes of Bill 15, are considered those whose pensions are in the process of being paid on December 31, 2013, as well as members who started receiving a retirement pension or who made a request to the plan administrator between the January 1, 2014, and June 12, 2014.
