August 07, 2009
Foodmaker Kerry (Canada) Inc. can take "contribution holidays" from pension plan funding when surpluses enable it to still meet its obligations, the Supreme Court of Canada ruled.
Rejecting a challenge by some of the benefit plan's beneficiaries, the high court voted 5-2 in favour of upholding a 2007 lower court decision that also backed Kerry's ability to pay plan administration expenses using plan assets.
"Here is a decision that is pro-employer and pro-use of surplus" to pay expenses, says Mitch Frazer. "This will definitely encourage Canadian companies to preserve defined benefit plans."
Torys was not involved in the Kerry Canada case.
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