IN THE MATTER OF the Pension Benefits Act, R.S.O. 1990, c. P.8 (the “Act”), in particular sections 87, and 89;

AND IN THE MATTER OF the Canada Forgings Inc. Pension Plan for Salaried Employees, Registration Number 0929687 (“Salaried Plan”).

AND IN THE MATTER OF the Canada Forgings Inc. Pension Plan for Members of Unifor Local 199, Registration Number 0236240 (“Hourly Plan”).

NOTICE OF INTENDED DECISION

TO:                
Canada Forgings Inc.
P.O. Box 308, 130 Hagar Street
Welland, ON L3B 5P8

Attention: 
J. Scott Naar
President and Chief Executive Officer
Employer & Administrator

TAKE NOTICE THAT pursuant to section 87 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”), the Director, Pension Plan Operations (the “Director”) intends to make an order to require Canada Forgings Inc. (the “Employer”) to remit outstanding employee and employer contributions to the Salaried Plan and outstanding employee contributions to the Hourly Plan, with applicable interest, immediately and no later than 10 days after the date of the order. Details of this intended decision are described below.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca.

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE “TRIBUNAL”) PURSUANT TO SUBSECTION 89(6) OF THE ACT. A hearing by the Tribunal about this Notice of Intended Decision may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within thirty (30) days after this Notice of Intended Decision is served on you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:       
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor Toronto, ON
M2N 6S6
Attention: Registrar

Fax 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within thirty (30) days after this Notice of Intended Decision is served on you, an order will be issued as indicated in this Notice of Intended Decision.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal’s website at www.fstontario.ca.

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal (“Rules”) made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22. The Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at (416) 590-7294, or toll free at 1-800-668-0128 extension 7294.

REASONS FOR INTENDED DECISION

1. The Employer maintains two pension plans for its employees, the Salaried Plan and the Hourly Plan (collectively, the “Plans”). The Employer is also the Administrator of both Plans.


2. Starting in the middle of 2022, the Employer failed to remit contributions to the Plans. Specifically, the Employer failed to remit employee contributions for the Hourly Plan and failed to remit employee and employer contributions for the Salaried Plan. To date, these contributions have not been remitted to the Plans.



Previous Notice of Intended Decision

3. The Employer has a history of failing to remit contributions to the Plans.


4. In March 2017, staff of the Financial Services Commission of Ontario (“FSCO”) conducted an onsite examination of the Salaried Plan and discovered that both employer and employee contributions had not been remitted since April 2016. Over the course of 2017 and 2018, the Employer remitted some outstanding contributions after making several proposals to FSCO regarding the payment of outstanding employer contributions.


5. On December 27, 2019, after the Employer failed to make all the required payments, the Head, Pension Plan Operations and Regulatory Effectiveness issued a Notice of Intended Decision requiring the Employer to remit $424,992 plus interest in respect of outstanding employer contributions for the Salaried Plan.


6. The Employer requested a hearing before the Tribunal in response to that Notice of Intended Decision.


7. The proceeding was settled without a hearing and the Employer paid all outstanding employer contributions for the Salaried Plan in accordance with Minutes of Settlement.



2022 Failure to Remit Contributions

8. FSRA staff continued to monitor the remittances of the Employer to ensure that the Plans were being funded in accordance with the Act and Regulations.


9. Over the course of 2021, the Employer consistently failed to remit contributions in a timely manner. The Employer made the required contributions only after FSRA staff made inquiries.


10. Since July 2022, the Employer has failed to remit any contributions to the Plans. To date, the Employer has failed to remit the required contributions listed in Appendix A, starting with remittances for May 2022 that were due by June 30, 2022. The unremitted contributions include employee contributions which the Employer has deducted from salaries.


11. On February 3, 2023, FSRA sent a letter to the Employer and the Plans’ actuary requiring that all outstanding contributions be remitted immediately to the respective Plans. To date no payment has been made.


12. In February and March 2023, in response to a request for information under section 108 of the Act, the Employer provided financial information that indicated the Employer has not maintained sufficient funds to remit outstanding contributions to the Plans.



Grounds For Section 89 Order

13. Subsection 55(2) of the Act requires an employer to make contributions in accordance with the prescribed requirements, in the prescribed manner and at the prescribed times.


14. The outstanding Employer contributions include normal cost contributions for the Salaried Plan.


15. The Employer has also failed to remit employee contributions for the Plans, which it has deducted from employee salaries.


16. Paragraph 3 of subsection 4(4) of Regulation 909 under the Act requires that employer normal cost contributions be paid in monthly instalments within 30 days after the month for which the contributions are payable.


17. Paragraph 1 of subsection 4(4) of Regulation 909 under the Act requires the employer to remit all sums received by it from an employee, including money withheld by payroll deduction or otherwise from the employee, as the employee’s contribution to the Plan, within 30 days following the month in which the sum was received or deducted.


18. Paragraph 87(1)(c) of the Act provides that the Chief Executive Officer may make an order requiring an administrator or any other person to take any action in respect of a pension plan or a pension fund if the Chief Executive Officer is of the opinion, upon reasonable and probable grounds, that the administrator of the pension plan, the employer or the other person is contravening a requirement of the Act or the regulations made under the Act.


19. The Employer has not complied with the requirements for remitting the outstanding employee or employer contributions to the Plans since July 2022. Furthermore, the Employer has engaged in this behaviour in the past and only remitted contributions after the issuance of a Notice of Intended Decision. As such, the Director, acting under delegated authority, has reasonable and probable grounds for concluding that the Employer is contravening the Act and the regulations made under the Act.


20. Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, April 11, 2023.

Original signed by

Claire Woodcock
Director, Pension Plan Operations
Financial Services Regulatory Authority of Ontario

Appendix A

¹ No employer contributions were required given the plan’s funded status

Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.