General Motors and General Dynamics Pension Class Action

The content of this page has not been approved by the Court nor does it constitute legal advice. It is for the purpose of providing general information only.

IMPORTANT UPDATE

Following the implementation of the Court approved Settlement Agreement, Class Counsel identified that a shortfall continued to occur in the pension benefits being received by certain class members. After a thorough investigation, it was determined that certain class members were not receiving the full benefits provided to them under the Settlement Agreement. .  As explained below, the parties were able to resolve most of the settlement administration issues as amongst themselves (the “Settlement Administration Matters” – see section 1 below), however, one issue required the plaintiffs to bring a motion before the Court for directions to enforce the terms of the Settlement Agreement (the “Settlement Implementation Matters” – see section 2 below).

1. Settlement Administration Matters

GM Canada, GDLS and Class Counsel, together with their respective actuarial advisors, have carried out a comprehensive review of the pension benefits being paid to class members which resulted in a detailed analysis of the GM Plan, the GDLS Plan, the Settlement Agreement, and the calculation of the Wrap-Around Benefit. As a result, the parties have negotiated a “Settlement Implementation Agreement” which clarifies the calculation methodologies to be used by all parties in calculating various aspects of the Wrap-Around Benefit and related benefits under the GM Plan.

As a result of the review, both GM Canada and GDLS have made changes to their pension administrative systems, practices and procedures as described in the Settlement Implementation Agreement, to ensure consistency in determining the GM Plan benefit offset used by GDLS in the calculation of the Wrap-Around Benefit.

Copies of the Settlement Implementation Agreement as well as illustrative sample benefit calculations can be found below:

Settlement Implementation Agreement (May 20, 2015)

Illustrative Sample Benefit Calculations

Settlement Administration Notices

On or about June 24, 2015, a Notice of Settlement Administration Matters was distributed to class members (or a class member’s surviving spouse, designated beneficiary or estate) which provides a further explanation of the additional calculation issues, identified by the parties, which relate to the Wrap-Around Benefit pursuant to the Settlement Agreement.  

Each class member (or a class member’s surviving spouse, designated beneficiary or estate) will also receive, in due course but no later than December 31, 2015, a personalized information package from GDLS confirming whether or not any adjustment is required to be made to his or her Wrap-Around Benefit as a result of the Settlement Implementation Agreement, and if so, the personalized information package will provide specific information about their individualized adjustment.

Each class member (or a class member’s surviving spouse, designated beneficiary or estate) who ceased to be an employee of GDLS prior to January 1, 2007 will also receive, in due course but no later than December 31, 2015, a personalized information package from GM Canada confirming whether or not any adjustment is required to be made to the benefits paid from the GM Plan.  

Each class member who ceased to be an employee of GM Canada on or after January 1, 2007 through to December 31, 2014 should have already received a personalized information package from GM Canada regarding whether or not an adjustment was required to be made to the benefits paid from the GM Plan (See Below).

2. Settlement Implementation Matters

During the course of the comprehensive review of pension calculations for class members, many issues were identified and resolved; those issues are set out in the Settlement Implementation Agreement as described above. There was however one issue which arose in the course of the parties review: specifically whether the general freeze under the GM Plan that applied to recognition of earnings after December 31, 2006 also applied to recognition of earnings increases at GDLS beyond December 31, 2006 (the “GDLS Earnings Issue”).  GM asserted that the freeze did apply to class members. Class Counsel and GDLS disagreed. 

Class Counsel brought a motion before the Court for directions to enforce the terms of the Settlement Agreement. On December 3, 2014, the Ontario Superior Court of Justice released a decision requiring General Motors to administer its pension plan pursuant to the terms of the Settlement Agreement. Specifically, the Court ruled that GMCL must take into account earnings with GDLS on and after January 1, 2007, in the formula used to determine what increase, if any, to apply to the pension earned under the GM Plan as at March 1, 2003.

Reasons of Justice Haines (December 3, 2014)

Settlement Implementation Notices

On or about April 24, 2015, a Notice of Settlement Implementation Matters was distributed to class members (or a class member’s surviving spouse, designated beneficiary or estate) which provided a further explanation of the December 3, 2014 decision as well as information about the general impact of the Court’s decision.

An individualized notice was also sent to class members (or a class member’s surviving spouse, designated beneficiary or estate) who ceased employment with General Dynamics, by retirement, termination or death, on or after January 1, 2007. The individualized notice provided specific information about the effect of the Court’s decision on a class member’s individual situation. 

If you do not receive a copy of any of the notice(s), please contact Class Counsel to ensure that the parties have your updated contact information.

 

Summary of the Case

The class action against General Motors of Canada Limited (“GM”) and General Dynamics Land Systems – Canada Corporation (“GD”) was commenced by Statement of Claim issued February 4, 2005.  The claim sought relief in respect of an alleged shortfall in pension benefits payable to salaried employees who transferred from GM’s defense-based business to GD pursuant to contracts of employment effective March 1, 2003.

In essence, the claim alleged that the salaried employees’ pension plans of GM and GD did not interact in such a way as to provide certain Class Members with the same pension benefit they would have received if all of their career service in the business was accrued under the GM pension plan as it was written the date of transfer.

The alleged shortfall is known as the “wraparound liability” or a “wraparound benefit”.  Put another way, the shortfall is the amount by which the benefit that would have been paid under the March 1, 2003 terms of the GM pension plan if the Class Members had continued under the terms of that plan, exceeds the amount payable under the existing terms of the GM and GD pension plans.

Summary of the Settlement

A Settlement Agreement was reached between the parties to resolve the litigation.  The settlement is a compromise of disputed claims.

The Settlement Agreement requires GD to amend the GD pension plan in order to provide 100% of the alleged shortfall referred to as the “wrap-around benefit” to Class Members effective January 1, 2011.

For those Class Members who retired prior to January 1, 2011, and who have experienced a wraparound shortfall, a “catch-up payment” will be made in order to pay 100% of the value of the wrap-around benefit to such retirees from the date of their retirement to January 1, 2011, plus interest.  Effective from January 1, 2011 forward, the pension benefit of each such retiree Class Member will be increased to reflect a “wrap-around benefit” enhancement where applicable.

For those Class Members who left the employ of GD after March 1, 2003 and elected to receive a commuted value payment, a similar catch-up payment will be made where such a commuted value payment should be increased to reflect the “wraparound benefit”.

If a Class Member dies or terminates employment before receiving payment of the “catch-up payment”, or any other benefit provided for under this settlement, the person entitled under the terms of the GD pension plan will be entitled to the catch-up payment or death benefits calculated taking into account the wrap-around improvement.

For those Class Members who are employees of GD and have yet to terminate or retire following the acquisition from GM, pension benefits will accrue pursuant to the wrap-around amendment where applicable.

The wraparound amendments will be made to the GD plan on an indefinite basis.  However, GD has agreed that no amendments will be made to the GD pension plan in respect of the “wrap-around benefit” prior to March 1, 2013.  After that time, GD reserves the right to amend or terminate the “wrap-around benefit” subject to applicable statutory requirements and the provision of reasonable notice to Class Members under applicable law.  No such amendment can remove the “wraparound benefits” accrued to Class Members up to the date any such amendment might be made.

The Defendants have agreed to the above terms in exchange for a full and final release of the claims against them.  The full particulars of the release are contained within the Settlement Agreement.

Settlement Documents

View Documents

Class Members

If you have questions related to this action please contact Class Counsel at 519.679.9660, ext. 711 or 1.800.263.0489, ext. 711 or by e-mail at: