Memorandum of Agreement relating to surplus sharing under the Canadian Broadcasting Corporation Pension Plan and to cost management under the Canadian Broadcasting Corporation Supplementary Health Care Plan
Q: What is the arbitration decision on the 2009 benefits and pension agreement about?
A: In 2019, the Corporation said it was unilaterally terminating the Memorandum of Agreement that it had signed with its unions and the CBC Pensioners National Association (PNA) in 2009. This Agreement provides for two things:
- The equal sharing of pension plan surpluses between the Corporation and members of the plan; and
- The setting up of a Health Care Fund to pay for out-of-the-ordinary increases in the cost of employee health care benefits.
The unions and the PNA challenged the Corporation’s attempt to terminate the Agreement, and took the Corporation to arbitration to ensure that members’ rights were protected. The arbitration decision issued on June 9, 2023 agrees with the unions and the PNA, that the Corporation could not terminate the Agreement and that the Agreement remains in effect. In his decision, arbitrator Justice Dennis O’Connor wrote the following:
“I make the following Award:
(a) A Declaration that the MOA is a valid and subsisting contract between the parties and that the notice of termination dated December 13, 2019 by which CBC/Radio Canada purported to give three months’ notice of its intention to terminate this agreement is of no force or effect and does not operate to terminate the MOA;
(b) An Order that CBC/Radio-Canada forthwith recognize STTRC as a full party to the MOA, and meet with the CCSB to reach any necessary agreements on the implementation of this Order.”
This decision means that all provisions of the Agreement remain in full force and effect and that the Corporation must meet its obligations to share pension surplus, consistent with the terms of the agreement. The decision also removes any uncertainty about the status of the Health Care Fund, which was created by employee contributions of 0.1% of their wage increases from 2009-2019 to ensure there is no elimination or reduction in employee benefits as costs rise. The decision confirms the unions’ oversight of the Fund and its use through the unions’ participation on the Consultative Committee on Staff Benefits (CCSB).
The Arbitrator also ruled that STTRC is a full party to the agreement. This means that all unionized employees have all of the rights provided by the Agreement.
Q: How much money are we talking about?
A: The 2009 Agreement calls for an equal distribution of pension surpluses between the CBC and contributors to the pension plan (current staff and retirees). In a surplus position, defined by specific federally regulated criteria on pension solvency, CBC is required by law to forego making employer contributions to the pension plan. There have been two such so-called “contribution holidays” in the past two years for the Corporation, totalling more than $115 million plus interest.
As for the Health Care Fund, it is our understanding that it presently contains more than $40 million, though we have not had proper updating of its status since 2019 when the Corporation purported to terminate the 2009 Agreement. As noted above, the Fund is intended to be used as a reserve in circumstances where annual healthcare costs exceed an agreed upon threshold.
Q: When will I get my share of the pension surplus?
A: The CBC originally committed to providing payments by the end of this year, but we are likely looking at late spring or early summer before any payment is issued. Whatever is paid will come in the form of a single payment.
Q: Is the payout taxable?
A: Yes, however those with RRSP eligibility will be able to have some or all of their payout sent directly to their RRSP account. Unfortunately, those without RRSP room or access to RRSP shelters will have the CRA minimum deducted at the time of the payout. Money cannot be directly transferred into a RRIF after it’s been created. If you have specific questions, we recommend that you speak with a financial adviser.
Q: I am concerned about tax implications of the payout and the possible impact on my Old Age Security (OAS). Is it possible to have the surplus payout moved to next year?
A: The simple answer is no. The payout schedule for this year is based on two previous surpluses and payouts under the Memorandum of Agreement (MOA) are already past due. Because it covers surpluses from both 2021 and 2022, more than 40,000 individual payments must be calculated. So, there is no provision in the agreement that would provide for customized individual payouts. Additionally, the plan continues to perform well and there is every possibility there will be another payout in 2023. As to OAS reductions, no reduction takes place until income exceeds about $80,000. Also, any monies deducted from OAS do count as a tax credit. We urge those concerned about tax implications to seek independent financial advice.
The CBC plan covers a variety of people with a variety of financial situations and needs. Delaying a payment might provide some tax advantage to some but may also severely disadvantage others. Our duty to pensioners is to do the best we can to ensure the spirit and intent of the MOA are respected and the rules are followed.
Q: What about post-retirement spouses who are currently disqualified from inheriting pension payments?
A: “Post-retirement spouses” who married after the pensioner retired and began to collect a pension, do not qualify for a payout.
Q: If a member dies prior to payout, what does the legally recognized surviving spouse receive? Is it the same amount, or a pro-rated reduced amount?
A: The amount received depends on the date of death. Two surpluses have been declared – one for 2021 and 2022. If the retiree died during one of those two calendar years, they should be entitled to a full share up to the point where the survivor pension began. At that point, the surviving spouse beneficiary would get 60% of the retiree’s payout.
Q: What happens to the money in the case of a member who dies, has no spouse, and whose estate is still in process?
A: Any money owed would go to the estate of the deceased.
Q: How about next steps?
A: CBC has committed to working with the unions and the PNA to continue implementing the MOA, including as it relates to pension surplus sharing. We continue to meet with CBC and the unions to ensure that we are all doing what needs to be done.
However, the pension regulator, the Office of the Superintendent of Financial Institutions (OSFI), requires consent from at least two-thirds of all contributors (roughly 8,000 retirees and deferred pensioners). Failure to get that level of consent may prevent any distribution of surplus.
Q: How do we give our consent so the payout can proceed?
A: CBC pensioners have been mailed a package containing details for the planned distribution of pension surplus. That package includes a consent form that we strongly urge you to complete, sign, date and return by December 8, 2023.
There is also an electronic option. Members can go to “My Pension Statement” on the PAC Website. The consent form and information are available as a pdf. You need to print the form, sign and date it manually, scan it and e-mail it back to PAC at firstname.lastname@example.org.
Q: Does consent from two-thirds of pension contributors mean two-thirds of pensioners and employees combined?
A: The regulator is treating unionized employees and retirees as two separate groups. It has accepted that, by law, the unions represent all their members. Therefore, the two-thirds requirement for their members has been satisfied.
However, because retirees do not have the same legal standing, individual consent is required. The pool of people not represented by the unions (pensioners, survivors, deferred pensioners and non-union employees) represents about 12,000 individuals, which means more than 8,000 consent forms will have to be returned to meet the OSFI requirement.
This is why we are encouraging pensioners to share the information and to return the consent form as soon as possible.
Q: What happens after we provide our consent forms to OSFI?
A: With your cooperation in returning the consent forms, we fully expect the payout will be supported. Once the federal regulator is satisfied that enough plan members agree to a payout, the CBC will formally seek OSFI’s consent to withdraw the surplus and begin its distribution.
OSFI approval is mandatory and assuming it consents to the withdrawal and the surplus payout, it will give notice in writing. It will then take another 40 days before payouts can begin.
We are likely looking at late spring or early summer before any payment is issued. Whatever is paid will come in the form of a single payment.
Q: Why is the Superintendent of Financial Institutions (OSFI) asking CBC pensioners to provide signed consent forms for the payout of surpluses? Isn’t it obvious that retirees would welcome payout?
A: While we fully expect that pensioners and employees will consent to the distribution of pension surplus, the role of the regulator is to ensure the security of pensions. The payout of surplus is considered an improvement to benefits. For that to be accomplished, the plan sponsor (CBC) has to remove funds from the pension plan.
OSFI needs to be assured that plan members are aware of the withdrawal and understand the reason for it. Along with the consent form, all contributors have been sent an information package outlining the background for the payout and its impact on the funds of the plan.
We strongly urge you to read the document and return the consent form as quickly as possible.
Q: They want us to return the consent form by December 8. Why such a quick turnaround?
A: The short answer is that the quicker people respond, the faster surplus payout can be done.
We strongly urge you to read the document and return the consent form as quickly as possible.
The critical aspect of this is to demonstrate to the regulator that at least two-thirds of retirees support the payout. An extension of the date is possible if that number is not reached.
Q: Assuming the payout is coming, how much money are we talking about?
A: We still do not have a final percentage for individual distribution amounts. We expect to know the exact amount to be distributed, as well as the process for determining individual payments, in the very near future.
The process will use the global amount and be determined as a percentage of individual contributions. By way of example, in 2000, the global amount was approximately $134 million and the percentage used was 17%.
Eligible members of the plan will include current employees, deferred pensioners, as well as surviving spouses and surviving children.
Q: I will be away from home and will not get the material. Can it be sent by email and can I fill out the consent form online?
A: There is an electronic option to receive and submit your consent form. Members can go to “My Pension Statement” on the PAC Website . The consent form and information are available as a pdf.
You need to print the form, sign and date it manually, scan it and e-mail it back to PAC at email@example.com.
Q: When I left the CBC, I took my pension and moved it into an RRSP. Do I get a share of the surplus?
A: No. In order to be eligible, you must have contributions in the plan, either as a pensioner or employee.
Q: Can someone else sign the form on my behalf?
A: As a general rule, no, unless that person is a legal guardian or has financial power of attorney.
Q: Does the sharing of surplus potentially put the pension plan in jeopardy?
A: We believe the sharing of surplus will not present a risk to the plan. The protection of our pensions was a serious consideration when the Memorandum of Agreement, which sets out the terms for surplus sharing, was negotiated.
The Agreement only allows a sharing when the value of the assets in the plan exceed liabilities by at least 5%. The plan has nearly $8 billion in assets. The amount to be shared is around $115 million, which represents less than 1.5% of the value of the assets. So, we are reasonably confident the payout will not pose a risk to our pension benefits.
Every contributor should have received a package setting out all the details. We strongly urge you to read the documents and return the consent form as quickly as possible.
Q: What happens if we are unable to get two-thirds approval for the surplus sharing?
A: We certainly hope that is not the case. Ultimately the decision rests with OSFI. The regulator wants to assure that contributors have been consulted and overwhelmingly agree with the surplus distribution. There is a provision in the OSFI regulations that allows for the appointment of an arbitrator in circumstances where more than 50% of the eligible group has given consent but the two-thirds threshold has not been met. However, the process would obviously take even more time and there is no guarantee of outcome. Our best interests are served by reaching the desired quorum. By achieving two-thirds support, that question should be sufficiently answered and should make the regulator’s decision straightforward.
Q: How do I access the Pension Administration Centre website?
A: The Pension Administrations Centre website (www.pensionadmin-cbc-src.ca) contains information about your CBC pension and benefits, government plans, tax issues, and how to live well in retirement.
You’ll need to use your CBC ID (found on your CBC Notification of Deposit) and your temporary initial password to log in and then set a new password and challenge questions. Your temporary initial password is your date of birth (in YYYYMMDD format) followed by the last three characters of your CBC ID. All letters in your initial password must be entered in capital letters.
Forgot your password?
Made three attempts and locked yourself out? You don’t need to contact the Pension Administration Centre to reset your password! The answers to your challenge questions are the key to resetting your password on your own. Simply, click Forgot Password on the login page and follow the onscreen instructions. Here’s all you’ll need to reset your password:
- Your CBC ID—found on your CBC Notification of Deposit
- Your temporary password—your date of birth (in YYYYMMDD format) followed by the last three characters of your CBC ID. All letters in your initial password must be entered in capital letters.
- The answers to your challenge questions—these are case sensitive, so be sure to enter them exactly as you initially wrote them. After three unsuccessful attempts at answering your questions, you’ll be locked out. If this happens, you’ll have to call the Pension Administration Centre at 1 888 604-9258 (select your language, then option 2, then option 2 again) to unlock your account.
Q: Will your vote count? Yes….
A: Do not panic if you’ve submitted your surplus payout consent form online and have not received any confirmation. We have heard from a number of pensioners expressing concern over the lack of acknowledgement.
When a Plan member sends their ballot by email, they should receive an auto-reply message, which means technically that PAC received their emails. On some occasions, the automatic response may go to spam, trash or may even be blocked by the member’s internet provider and unfortunately, that is something that can’t be controlled.
However, if the consent requirement level is not met PAC will follow-up with the Plan members who have not sent in their ballot (either by email or mail) or who have not completed their form correctly (e.g. have not checked a box, no signature).
In the meantime, for those who have not received the automatic reply, they can also send their form by mail. PAC will need to ensure, however, that the vote is not counted twice.
Please note the envelope to return your ballot carries the postal code H3B 9Z9 because it is a specially given address for Prepaid Business Reply mail only. This is definitely a legitimate postal code. I am guessing that the post office said it couldn’t send it registered mail because it is a POSTAL BOX ADDRESS that was given specifically to accept the ballot returns. It is to be posted only.
Q: WHAT HAPPENS NOW?
A: Now that pensioners and employees have confirmed their support for payout from the pension plan surplus the process will take the next crucial step toward distribution.
Early next month the CBC will write to the Office of the Superintendent of Financial Institutions (the regulator) to ask for the release of approximately $130-million dollars from the plan. At the same time a “second notice” will be sent to all contributors advising them of the request. There is no requirement for anyone to reply to the notice but anyone who wishes to do so will be given 30-days from receipt to make comment directly to OSFI.
Assuming no other issues arise, and the regulator approves the distribution there is an additional 40-day hold before the funds are released.
Payments will be made to individuals in a lump sum. For those who have access to RRSP accounts and adequate room the funds can be transferred directly to an RRSP account. For everyone else the funds are subject to a minimum tax withholding. For amounts of up to $5000 the withholding is 10%, for amounts of more than $5000 up to $15,000 it’s 20% and above $15,000 it’s 30%.
The payouts will be made as a percentage of individual lifetime pension contributions. That percentage is yet to be determined although we expect to know what it is early next month. Contributors will be notified of the amount they are to receive.
IMPORTANT NOTES: All of this is subject to approval of the regulator. We may also be doing the process all over again next year. The current payout is based upon surpluses generated in 2021 and 2022. There is every indication that we will have another surplus that qualifies for distribution at the end of this year.
We will continue to update these FAQs as we receive more information.