Lawsuit of the week: Credit union employees sue pension plan trustees over retirement age increase

A group of credit union employees is suing the trustees of the British Columbia Credit Union Employees’ Pension Plan for allegedly failing to consult members ...
Photo: Mike Wakefield, North Shore News

A group of credit union employees is suing the trustees of the British Columbia Credit Union Employees’ Pension Plan for allegedly failing to consult members about increasing the retirement age for full benefits due to solvency issues with the plan.

Wendy Larkin, Nicole Hubert, Tracy Noseworthy and Cheryl Trevison filed a notice of civil claim in BC Supreme Court on April 4 against trustees Marni Johnson, Nancy Meyer, Frederick Bobye, Kenneth Hahn, Ron Johnston, Diana Chan, Norm Krannitz, Heather Johnson, Ted Schisler, John Allen, Lee Rhodes and David Gaskin.

The plan, originally established in 1971, has 25 participating employers. Up until 2009, members could receive full benefits at age 60, which was raised to 62 in 2010. However, the plan’s solvency ratio had fallen in 2012 due to the rising average age of active members, increased life expectancy for pensioners and low interest rates.

In response, the defendants increased participating employers’ contributions and saw the plan’s solvency ratio improve to 82% in fiscal 2015 from 73% in fiscal 2012. The trustees then raised the age for full benefits to 65, effective January 1, 2017.

“Increasing the retirement age adversely affects members by delaying the start of their unreduced plan benefits,” the claim states. “The defendants failed to consult with members in increasing the retirement age.”

Plaintiff Larkin, according to the lawsuit, will have to work an additional five years to receive full benefits after working for First Credit Union in Powell River since 1981.

“The defendants breached their fiduciary duty and duty to act in good faith for the benefit of members by improperly considering the interests of participaint employers in increasing the retirement age,” the claim states. “Past measures adopted by the defendants have proven successful at increasing the solvency ratio that the plan is almost 100% funded on a going-concern basis, such that further reduction in benefits are not required.”

The plaintiffs seek damages for breach of fiduciary duty and orders compelling defendants to roll back the changes to the plan’s retirement age. The allegations have not been tested or proven in court, and the trustees had not responded to the lawsuit by press time.  

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