Employers Should Review Plan Terms Defining Eligibility For Retiree Benefits

Even though post-retirement benefit (PRB) plans are not the same as registered pension plans, and are not subject to pension standards legislation, the recent arbitration decision in Regional Municipality (Durham) v. Canadian Union of Public Employees, Local 1764 is an important reminder to both employers and employees that benefits under pension plans and PRB plans can often be linked, with the result that a decision to take a transfer of the lump sum value (commuted value) of pension benefits could render a former employee ineligible for PRBs.

The case involved a grievance filed by CUPE on behalf of a former (unionized) employee of Durham. As an employee of Durham, he was a member of the OMERS pension plan and also entitled to PRBs under a plan sponsored by his employer, if he qualified for such benefits on his retirement. The collective agreement in question provided that in order to qualify for PRBs (extended health and dental benefits), employees must meet three