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The settlement between the Association
for Pension Enhancement at Royal Trust (APERT), an association of
Royal Trust pension plan members and the Royal Bank of Canada has
been approved by the Ontario Superior Court and Quebec Superior
Court. The settlement is valued at approximately $51 million
dollars.
The class action suit originated in
1996 when several Royal Trust pension plan members retained Cohen
Highley LLP to obtain a preliminary opinion on their entitlement to
a substantial surplus in the plan.
John Burleton, Chairman of APERT’s
Negotiating Executive Committee, is delighted with the Judgment and
resulting benefits to members and their families. “Cohen Highley
brought together the concerns of our members in a collective and
effective way. The APERT members’ support of and participation in
this class action to resolve these issues and find a solution has
clearly paid dividends today.”
As part of the negotiated settlement,
some members of the Royal Trust plan were offered pension
improvements and, in most cases, cash payments. As well, Royal
Bank’s right to continue certain administrative practices with
respect to expenses and calculation of employer contributions has
been confirmed. While there is no admission of fault by Royal Bank
either for its own actions or the actions of Royal Trust, the
settlement resolves several long standing disputes to the mutual
benefit of all parties. “This settlement has clarified the rights of
all parties going forward so we can avoid further
misunderstandings,” said Gary Dobbie, senior vice-president,
Compensation & Benefits. “We are pleased that we were able to work
cooperatively with all stakeholders to find a settlement that is
fair for all parties.”
The settlement is applicable only to
the Royal Trust pension plan and does not involve any other pension
plans of Royal Bank or its affiliates. The settlement is still
subject to a number of conditions being satisfied, including
regulatory approval.
Some Answers to your Questions
Q: What does APERT stand for?
A: Association for Pension Enhancement at Royal Trust
Q: What is the lawsuit about?
A: In October, 2000, a group of Royal Trust Pensioners
commenced a lawsuit as a result of certain longstanding disputes
regarding the administration of the Pension Plan.
Q: Why has a settlement been
proposed?
A: Most lawsuits are settled. The parties in this case felt
that a mutually beneficial agreement was preferable to the expense,
duration and uncertainty of litigation. Royal Bank and Royal Trust
will benefit from flexibility within the Plan and confirmation of
their legal right regarding certain administrative practices. In
return, people who qualify pursuant to the settlement will receive a
financial benefit.
Q: Who is impacted by the proposed
settlement?
A: In general, some former and current Royal Trust Pension Plan
members are impacted by this settlement provided they fall into one
of the following two categories.
The APERT Entitlement Group consists
of the following:
In general these are individuals who had an entitlement under the
Royal Trust pension plan as of December 31, 1989. This group
includes the following:
Royal Trust employees who had an
entitlement under the Royal Trust Pension Plan as at December 31,
1989.
Royal Trust pensioners or spouses of
pensioners or members who were receiving a pension from the Royal
Trust Pension Plan as at December 31, 1989.
Individuals who are spouses or
beneficiaries of a pensioner or member who has subsequently
deceased and who had an entitlement as at December 31, 1989.
Royal Trust terminated employees whose
pension funds had been vested and had not been paid the commuted
value of their pension as at December 31, 1989.
Royal Trust terminated employees who
had elected to defer their pension under the Royal Trust Pension
Plan and were classified as a Royal Trust Deferred Pensioner as at
December 31, 1989.
Royal Trust terminated employees who
had an entitlement under the Royal Trust Pension Plan as at
December 31, 1989 and terminated, not vested, after December 31,
1989.
The Non APERT Entitlement Group
consists of the following:
In general, these are individuals who were employed by the RBC
Financial Group and became members of the Royal Trust Pension Plan
after December 31, 1989 and who have maintained an entitlement under
the Royal Trust Pension Plan as of the date that the Court approves
the settlement. This group includes the following:
Royal Trust employees who are in the
Royal Trust Pension Plan at the date of Court Approval.
Royal Trust pensioners who joined
after December 31, 1989 or spouses of pensioners or members who
joined after December 31, 1989 and are receiving a pension from
the Royal Trust Pension Plan.
Individuals such as spouses or
beneficiaries of a member who joined after December 31, 1989 and
who has subsequently deceased and have an entitlement under the
Royal Trust Pension Plan at the date of Court Approval.
Royal Trust terminated employees who
joined after December 31, 1989 and whose pension funds were vested
and who had not been paid the commuted value of their pension at
the date of Court Approval.
Royal Trust terminated employees who
joined after December 31, 1989 and who had elected to defer their
pension under the Royal Trust Pension Plan and are classified as a
Royal Trust Deferred Pensioner.
Royal Trust employees who were
suspended in the RT Pension Plan upon transfer to another RBC
Financial Group member company and have not commuted out of their
pension.
Q: Who will be entitled to benefits
from the proposed settlement?
A: All members of the Royal Trust Pension Plan on December
31, 1989 will be entitled to benefits from the proposed settlement.
Members include active members currently earning pensions for
current service with Royal Trust, pensioners receiving monthly
pension payments from the plan and deferred vested members who are
entitled to receive pensions in the future when they reach
retirement age. Those entitled to benefits include the survivors,
beneficiaries and estates of members on December 31, 1989 who have
since passed away. Those members who have taken lump sum settlements
from the plan since that date, for example, when they terminated
employment with Royal Trust are also entitled to benefits. All these
members are referred to as pre-1990 members.
The pre-1990 members include both
those who joined APERT and those who did not join APERT. The only
requirement to be included in the pre-1990 members is that you had
to be a member of the plan on December 31, 1989 or a survivor or
beneficiary or estate of such a member.
In addition, plan members who are
members on the date the Court has approved the settlement, but who
are not pre-1990 members will also receive benefits. Because these
members do not have the same potential claims against the plan as
the pre-1990 members, these members will be entitled to a lump sum
of $2,000.
Of course, the benefits will be paid
only to those members who do not opt out of the settlement. A member
who decides to opt out of the settlement will receive nothing from
the proposed settlement.
Q: How much is the total value of
the proposed settlement?
A: The value of the proposed settlement is estimated to be
approximately $52 million.
Q: What benefits will the pre-1990
members receive?
A: The pre-1990 members will receive a total of five possible
benefits reduced by a contribution towards the additional fees for
the lawyers who act as class counsel.
The five possible benefits are:
- pension improvement for pensioners
- retroactive lump sum for
pensioners
- lump sum percentage of 1989
liabilities
- lump sum compensation for 2% non
contributory members
- top up to minimum
Q: What is the pension improvement
for pensioners?
A: Pre-1990 members who are currently receiving monthly
pension payments from the plan may receive an increase in the
monthly pension amount.
The monthly increase will bring each
pensioner's total future monthly pension from the plan up to the
same amount as it would be if they had received the same past
pension increases up to January 1, 2002 as Royal Bank pensioners.
This calculation has been made for all
pre-1990 members and their survivors who are receiving monthly
pensions from the plan on January 1, 2002. For those who have
retired recently, it may mean no increase because in recent years
the same increases have been applied to Royal Trust pensions as to
Royal Bank pensions. However, for those who retired over 10 years
ago, it may mean a significant increase in the monthly pension.
There is no guarantee of any future
increases in pensions.
Q: What are the retroactive lump
sums for pensioners?
A: Any pensioner or survivor who is entitled to a future
pension improvement may also be entitled to a retroactive lump sum.
The retroactive lump sum is the
difference between the pension they actually received during 2001
and the amount they would have received during 2001 if they had
received the same past pension increases up to January 1, 2001 as
Royal Bank pensioners.
Q: What are the lump sum
percentages of 1989 liabilities?
A: All pre-1990 members are entitled to a lump sum payment.
The lump sum amount is equal to 11.7% of the actuarial liability
calculated for each pre-1990 member as at December 31, 1989 plus
interest to January 1, 2002. The interest has been included in your
statement.
The actuarial liability for each
member depends on the member's age, gender, salary, past employee
contributions and length of service with Royal Trust, all as at
December 31, 1989. It is the result of a very complex calculation by
a professional actuary. It is the estimated amount of money that has
to be held in the pension fund for each member on December 31, 1989
to be sufficient to pay the pension the member has earned for
service to that date. An older active member with a higher salary
and longer service will have a higher actuarial liability. A younger
active member with a lower salary and shorter service will have a
lower actuarial liability. An older pensioner will have a lower
liability than a younger pensioner because the younger pensioner is
expected to live and collect the pension for more years in the
future.
Compound interest at 8% per annum has
been included in this lump sum for the period from December 31, 1989
to January 1, 2002. (8% was the rate of discount used in 1989 for
calculating these liabilities.)
Q: What is the lump sum
compensation for 2% non contributory members?
A: The 2% non contributory members are a small group of just
over 40 of the pre-1990 members. These members were accruing
benefits at the 2% rate before 1985 and were not required to make
any employee contributions. On January 1, 1985, the accrual rate was
reduced for these members from 2% to 1.25%.
These members will be entitled to a
lump sum as partial compensation for this reduction in their
benefits. The lump sum is equal to 25% of the actuarial value of the
pension that the member lost due to the benefit reduction for his
actual period of service between January 1, 1985 and January 1,
1995.
Q: What is the top up to minimum?
A: No pre-1990 member will receive less than $2,000 from the
settlement, including the actuarial value of the future pension
improvement for pensioners.
If the total of the first four
benefits, including the actuarial value of the future pension
improvement for pensioners, is less than $2,000, a top up amount
will be added to make the total up to $2,000.
Q: What is the contribution towards
additional fees for the lawyers who act as class counsel?
A: The court has approved additional compensation of
$2,000,000.
Those members who will receive the
highest dollar amounts will bear the highest dollar contributions to
these additional fees. In no event will the application of the
additional legal fees reduce the value of any member's settlement to
less than $2,000.
Q: How much will I get from the
proposed settlement?
A: If you do not opt out of the settlement, and it is
approved, you will receive the total of all of the benefits
described above. If you opt out of the proposed settlement, you will
receive nothing under the settlement.
Q: When will I receive the amounts
due to me?
A: Many different legal steps have to be taken before any
benefits can be paid out. The Court has approved the settlement but
the Financial Services Commission of Ontario and the federal Income
Tax authorities have to give their approvals. All parties are
committed to working cooperatively to ensure that the payments will
be made as soon as possible. However, our best estimate at this time
is that, if the proposed settlement is approved, payments may not be
made until mid 2004.
Q: Will I get any interest on my
entitlement from January 1, 2002?
A: All of the lump sums described above have been calculated as
at January 1, 2002, including interest. The proposed settlement
provides that interest will be added to those amounts from January
1, 2002 up to the date when all approvals have been obtained. The
rate of interest will be the net rate of return earned on the Royal
Trust pension fund during this period, subject to a minimum of 0%
per annum and a maximum of 6.5% per annum. If a member has completed
all the required documentation and the actual payment to a member is
delayed more than 45 days after all approvals have been obtained,
interest will be credited at 6.5% per annum during the further
delay.
Q: How do I know if I currently am
or was a member of the R.T. Pension Plan?
A: If you are not sure, please provide your personal details by
calling Royal Bank Human Resource Service Centre at 1-800-545-2555.
Name (former last name if your
current last name is different than when you were employee at
Royal Trust) Address
Sin Number
current RBC business group and
Transit
email id
date of employment at Royal Trust
Q: How do I know if my family
member was member of the R.T. Plan on December 31, 1989?
A: If you are inquiring on behalf of a family member of a
deceased family member, please provide the following details by
calling Royal Bank Human Resource Service Centre at 1-800-545-2555.
Your name and address information so
that we can contact you and advise you of our findings.
Name and address information of the
family member you are inquiring about (former last name if
different than when he/she was employed at Royal Trust)
Social Insurance Number of the
former employee
Date of employment at Royal Trust
Q: Will this settlement impact the
security of my current or future pension?
A: The Royal Trust Pension Plan remains in a stable financial
position and continues to have a surplus. |
