SERP Update - Communication 3

Hello to SERP members. Here is where we are with the SERP partial wind-up issue.

Legal and Actuarial

Koskie Minsky is the law firm engaged by CLPENS to pursue the class action lawsuit regarding Registered Plan expenses and Registered Plan surplus ownership. Koskie Minsky is being paid on a contingent basis from surplus, i.e. they only get paid if we win and the payment is from surplus prior to any distribution to members. The legal charge levied has to be approved by the Court.

Koskie Minsky has agreed to give us an initial opinion on the SERP issue. It may be that the SERP issue is so entwined with the Registered Plan issues that we can bring the SERP challenge into the original class action. If not, then we would need to fund any legal expenses for the SERP subgroup in some other way.

Currently, Koskie Minsky is reviewing the SERP trust document and various versions of the plan document (the two official ones, I believe, are dated Jan 1, 2001 and Jan 31, 2005). It appears that the sole purpose of the 2005 plan amendment was to allow the company to do a partial wind-up of the SERP whereas the original plan document only allowed for a full wind-up. There is also the potential to challenge the non-disclosure to members, or at least the failure to provide timely disclosure. Also, the partial wind-up was effective the day before the effective date of the new CIA standard for commuted values, and that timing disadvantaged all SERP members in the partial wind-up group.

Koskie Minsky has informed us that they will need an actuarial opinion regarding the financial impact to SERP members, and the financial impact, if any, on Registered Plan assets (it appears that, as the actuarial liability in the SERP is reduced, there is a compensating increase to the liability in the Registered Plan).

To get this actuarial opinion, we will need to spend some money.  Robertson Eadie & Associates Ltd., the actuarial consulting firm that will be providing expert testimony, as needed, in our class action lawsuit, has agreed to provide the required opinion for a fee of $1,500 to $2,000.  (It must be noted that, if the SERP issue proceeds further and expert testimony has to be presented at court, additional fees will be required.)

Funding an Initial Opinion

The CLPENS executive has wrestled with the question of who should pay for this SERP-related work. 

To the extent that there is a financial impact on affected SERP members, it is appropriate that those members should foot the bill.  To the extent that there is a financial impact on the Registered Pension Plan (in the form of surplus depletion), it is appropriate for the entire membership of CLPENS to pay.  Unfortunately, until we have this actuarial work done, it is impossible to assess the relative magnitude of these two impacts!

The CLPENS executive decided that, for this initial actuarial work, affected SERP members will be asked for a contribution.  To minimize our administrative work, a small number (10) of affected SERP members have been asked to provide $200 each.   Clearly, if a legal challenge is the appropriate response to the Company’s actions with respect to the SERP, more funds will be needed and our request for funds will be extended to all affected SERP members.

If the actual costs are less than the funds collected from affected SERP members, excess funds will be directed to the CLPENS general account.  To the extent that there is a delay in collecting the necessary funds from affected SERP members, funds from the CLPENS general account will be used on an interim basis.

If you are an affected SERP member who has not been asked for funds but you wish to make a voluntary contribution for our efforts with respect to the SERP, please send your contribution (marked “SERP”and payable to CLPENS) to:

CLPENS GROUP

P.O. BOX 37036

6502 YONGE ST.

NORTH YORK, ONT.

M2M 4J8