Greg Harding, QC and Taylor Woolsey of Field Law, presented Fiduciary Duty – as an Ingredient of the Pension “Mélange”  at the Calgary CPBI lunch session on June 15th.  The “Pension Mélange” is a unique blend of many different areas, including governing legislation, plan provisions, common law and interpretive guidelines.

Fiduciary duty is the highest standard of care known at law. A Fiduciary must act in a manner consistent with the best interests of the beneficiary. But the question is, when does fiduciary duty arise? This is unsettled at law.

There are the traditional categories of fiduciary relationships, such as trustee, agent and principal, but there are also ad-hoc fiduciary relationships which are established on case-by-case basis. The key elements of a fiduciary relationship and duties of a Fiduciary were provided, such as the ability of the Fiduciary to unilaterally make decisions that impact the beneficiary; it was also noted that fiduciary duty is about the process, and not driven by the results.

Greg acknowledged that there is much “hat wearing” in the pension field, as individuals act in roles ranging from sponsor to plan member. The law seeks to determine where the authority and responsibility rests.  He noted that Spiderman said it best: “With great power comes great responsibility.”

There can also exist a distinction between private and public pension plans in respect of the expectations of fiduciary duties.;

In the private sector, a sponsor can be both the administrator and employer. As administrator, there are fiduciary responsibilities. However, the employer role is typically non-fiduciary, and the two roles may, at times, be in conflict. It was also noted that the administrator is able to delegate some of their duties or tasks, but they cannot delegate away their fiduciary responsibilities.

Taylor and Greg highlighted a few relevant legal cases, and noted how the fiduciary relationship was a key element in each of the decisions.

In public sector plans, it is rare to find a fiduciary relationship between the government and beneficiaries, as the government also has a duty to act in the best interests of society as a whole.  Of note was the Calder v Alberta case where the Court held that there was no fiduciary relationship in play, and concluded there are fundamental differences between the duty owed in public and private pension plans.

The speakers then discussed some examples of the legal risks that are common in the cases that go to trial. These risks can be member communication and the duty to give notice, retirement decisions, plan amendments and conversions. Attendees were also reminded that policies are key – not just having policies, but being proactive and ensuring that such policies are reviewed and revised at regular intervals.

The final section of the presentation covered what is involved in engaging professional assistance. Following selection, contracting and monitoring, it is still the responsibility of the Fiduciary to understand, weigh and independently make the decision based on the due diligence process, as the fiduciary duty cannot be delegated.  Greg concluded by saying that being a Fiduciary must be put in context and is not something to fear. It comes down to common sense and how to be fair.

–        Joanne E. Verdel