Pension Plan Expenses: Implications of the Kerry FST Decision on Your Expense Practice

Article by Mitch Frazer*

The increasing cost of pension plan administration has more employers asking whether pension plan expenses may be paid from the pension fund. The answer remains unclear, despite several high profile court cases. The state of the law on pension plan expenses is further muddied by the complex nature of pension plans, which are often based on agreements, first executed decades ago and amended many times. As a result, the courts are faced with interpreting lengthy and ever changing document trails, as well as a complex area of law grounded in pension, contract, trust and employment principles.

On March 4, 2004, the Financial Services Tribunal (the "FST") released Kerry (Canada) Inc. v. Superintendent of Financial Services and Elaine Nolan et al..¹ Kerry is a departure from the approach developed in a line of more recent pension cases in Canada that address the issue of payment of pension plan expenses. While Kerry is an important statement by