Municipal pension plans — Quebec Superior Court ruling on the challenges to Bill 15

On July 9, the Superior Court of Quebec ruled on the applications to declare the Act to foster the financial health and sustainability of municipal defined benefit pension plans (“Bill 15”) unconstitutional and invalid.

In his 227-page decision, Justice Benoit Moulin deemed that provisions in Bill 15 aimed at suspending the indexation of the pension of retired members are unconstitutional. However, he dismissed applications to declare provisions related to active members unconstitutional.

Applications to remedy in favour of the active members remain before the Superior Court.

Adopted in December 2014, Bill 15 sought to restructure municipal defined benefit pension plans, both for past service in relation to deficits and future service in relation to new benefits.

Several employee and retiree associations had taken legal action to challenge this law as soon as it came into force. The challenge is primarily based on the violation of freedom of association, which includes the collective bargaining of working conditions and the infringement of members’ vested benefits.

The parties’ reactions to this ruling and the decision to appeal it will be made known in the coming days. Given the COVID-19 pandemic, applicable civil procedural time limitations to appeal the ruling are currently suspended by decree until July 15, with the possibility of further suspensions by subsequent decrees.

For more information about this ruling and its repercussions on your plan, contact our experts.