Plan Beneficiaries Cannot Unilaterally Terminate Pension Trust

The Supreme Court of Canada ("SCC") held on June 22 in Buschau¹ that the members and former members of a defined benefit pension plan cannot unilaterally compel termination of the plan’s trust for the purpose of accessing accumulated actuarial surplus.

A pension trust is integrally connected to the plan terms and founded upon detailed statutory regulation. Accordingly, the common law rule in Saunders v. Vautier² to the effect that a trust can be terminated, if all beneficiaries consent, was held not to apply. The plan’s sponsor and future beneficiaries have statutory and equitable interests in the plan that cannot be overridden. The SCC unanimously set aside an appellate ruling that a plan, previously closed to new members, could not be re-opened by the sponsor.