An update from the legal counsel of former Sears Canada Inc. employees says that employees “who opt to take the commuted value of their defined benefit pension are facing an immediate 19 per cent reduction in their entitlements,” writes Jennifer Paterson for Benefits Canada.
The update continues that “the reduction is a result of the underfunding in the Sears pension plan,” she continues, adding that as of the most recent actuarial valuation, the plan “had a windup ratio of 81 per cent.”
“Because the plan is underfunded and the transfer ratio is 81 per cent — the plan is only 81 per cent funded on a solvency basis — there are restrictions put in place about the quantum of commuted-value transfers that can be taken out,” Andrew Hatnay, a partner with Koskie Minsky’s benefits and pension practice and legal counsel for the non-unionized employees, is quoted saying.
“Members whose pension election forms were received by Sears after June 12, 2017, will get only 81 per cent of the commuted value. The remaining 19 per cent is payable over five years, but Koskie Minsky noted it can’t yet say when or if members will receive it,” continues Paterson.
More: Pension payments “subject to a number of factors.”

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