In an
earlier post, I provided an overview of the different ways that
some plan sponsors are looking to exit the defined benefit (DB)
world. In this post I consider the most drastic and complete way to
"restructure" a DB plan – through a pension
plan wind up.
There are pros and cons to a voluntary plan wind up by an
employer. On the pro side, a wind up is relatively quick, and may
be less risky compared to maintaining frozen, legacy DB benefits
for decades and continuing the ongoing DB funding risks. On the
other hand, wind up and settlement costs can be expensive and
exiting a DB plan can be problematic for older, longer service
employees.
An employer's ability to unilaterally wind up a plan is
contained in s.68(1) of the Ontario Pension Benefits
Act (the PBA) which requires notice to be remitted to any
trade union, the Ontario Superintendent of Financial Services, and
any person entitled to payment from the pension fund.
