CMHC Pension Plan Class Action Settlements

How Were the Payment Calculations Done?

How much money was available to pay the Class Members?

All of the sums below were approved by the Ontario Superior Court of Justice.

ABC
Gross settlement amount payable to class membersMinus (-) court approved legal fees & other adjustmentsNet settlement fund to share/pay to class members
Lacroix$4,857,911.00-$1,109,101.82$3,748,809.18
McCann$1,252,669.00-$276,111.47$976,557.53
  • Net payments to the class members (column C) were subject to Court approved deductions for legal fees and case expenses (column B)
  • The net settlement fund to be distributed to all class members must be shared pro-rata based on the same formula used to allocate the original benefit enhancements to CMHC pensioners in 1999 and 2001

How were the individual payments calculated by CMHC?

The steps taken by CMHC to calculate the payments are outlined in the table below, as agreed to by all parties:

Step 1

Determined the maximum return of net contributions that individuals would have received under the 1st and/or 2nd benefit enhancements using the below formula, and determined every individual’s percentage entitlement.

Individual Max. Return of Net Contributions ÷ Total Max. Return of Net Contributions for ALL Participating Class Members Entitlement (%) = Individual Percentage

Step 2Applied every individual’s percentage entitlement to the net settlement fund (outlined above).
Individual % entitlement x net settlement fund = Individual gross payment
Step 3Deducted federal (and Quebec or foreign where applicable) income tax withholdings from each individual’s gross payment to determine each individual’s net payment = amount of the cheque.
  • The one-time lump sum payments were calculated in strict accordance with the Court approved settlement agreement
  • CMHC deducted applicable withholding taxes, as required by law. While there has been required withholding of income tax on your allocation of the Net Settlement Fund as shown on your cheque stub, there may be additional income taxes payable by you when you file your 2018 income tax return, depending on individual circumstances. You should seek professional income tax advice.

Lacroix Calculation Example #1 (Net settlement fund = $3,748,809.18)

Indiv. Max. Return of Net Contributions$1,379.17
Individual Percentage Entitlement.03631381%
Individual Gross Payment$1,361.34
Federal Withholding Tax- $136.13
Quebec Withholding Tax- $68.07
Foreign Withholding Tax- $0
Total Individual Net Payment$1,157.14

Lacroix Calculation Example #2: (Net settlement fund = $3,748,809.18)

Indiv. Max. Return of Net Contributions$4,851.58
Individual Percentage Entitlement.12774344%
Individual Gross Payment$4,788.86
Federal Withholding Tax- $478.89
Quebec Withholding Tax- $0
Foreign Withholding Tax- $0
Total Individual Net Payment$4,309.97

McCann Calculation Example #1: (Net settlement fund = $976,557.53)

Indiv. Max. Return of Net Contributions$1,975
Individual Percentage Entitlement.10660245%
Individual Gross Payment$1,041.03
Federal Withholding Tax- $104.10
Quebec Withholding Tax- $52.05
Foreign Withholding Tax- $0
Total Individual Net Payment$884.88

McCann Calculation Example #2: (Net settlement fund = $976,557.53)

Indiv. Max. Return of Net Contributions$9,101
Individual Percentage Entitlement0.49127471%
Individual Gross Payment$4,797.58
Federal Withholding Tax- $479.76
Quebec Withholding Tax- $0
Foreign Withholding Tax- $0
Total Individual Net Payment$4,317.82

What is this about?

There are two (2) national class actions where class members are alleging a legal entitlement to receive certain benefit enhancements that were provided by way of a partial refund of contributions by Canada Mortgage and Housing Corporation (CMHC) to individuals who were members of the CMHC pension plan as of the dates below, including deferred-vested plan members and retirees:

Time PeriodPension benefit
As of the 1st January 19991st benefit enhancement
As of the 1st January 20012nd benefit enhancement

Both class actions claim entitlement to a return of contributions plus interest, i.e., a share of the 1st and 2nd benefit enhancements which were distributed to members of the CMHC Pension Plan in 1999 and 2001. CMHC employees who left CMHC under the workforce adjustment program and elected to leave the CMHC pension plan prior to these dates would not have received these benefit enhancements.

A global settlement of both class actions was reached on March 29, 2017, as part of six days of Mediation. The parties accepted that they each had a litigation risk, and that a settlement was in the best interests of all parties. Both class actions involve many legal issues, all of which had to be compromised, to achieve a settlement.

The McCann and Lacroix class actions were settled on the basis of a payment by CMHC of $7,090,580.00.

Class Action Settlement #1Class Action Settlement #2
LACROIXMcCANN
Read court approved legal noticeRead court approved legal notice

The Lacroix class members that are eligible to participate in the settlement will be eligible to receive their pro-rata share of the settlement amount which was calculated based on the same formula used to allocate the original benefit enhancements to CMHC pension plan members, deferred vested plan members and retirees:

  1. As of January 1, 1999 (the 1st benefit enhancement), and;
  2. As of January 1, 2001 (the 2nd benefit enhancement).

Lacroix class members that are eligible to participate in the settlement include former CMHC plan members whose employment had terminated pursuant to what CMHC described as its Workforce Adjustment Plan (WFA), implemented by CMHC between January 1, 1995 and October 23, 1998, who elected to receive the commuted value of their pension plan on termination and did not receive the 1st and 2nd benefit enhancements, and whose pension was vested at the time of their departure.

McCann class members will be eligible to participate in the settlement in connection with ONLY the 2nd benefit enhancement by CMHC from the CMHC pension plan which was received by individuals who were members of the CMHC pension plan on January 1, 2001.

McCann class members that are eligible to participate in the settlement include former CMHC plan members whose employment had terminated pursuant to the WFA who elected to receive the commuted value of their pension plan on termination and did not receive the 2nd benefit enhancements, and whose pension was vested at the time of departure.

All of the McCann class action members received benefit enhancements from the 1st benefit enhancement on January 1, 1999 because they were, at that time, CMHC Pension Plan Members, however they left the CMHC Pension Plan prior to January 1, 2001.

Right to Opt-In (meaning undo previous decision to Opt-Out) no later than October 20, 2017.Right to Opt-Out of the McCann settlement no later than October 20, 2017.
Right to object to the proposed settlements by submitting a letter of objection no later than November 15, 2017.

Important Note!

CMHC will withhold from each class member the income tax CMHC is required to withhold pursuant to the Income Tax Act and remit that amount directly to CRA. Please also note there may be more taxes owed, which are the responsibility of the class member.

What happens next?

The Ontario Superior Court of Justice will be asked to approve both the Lacroix and McCann proposed settlements, the payment of settlement funds to eligible class members and the lawyers’ fees.

This court approval hearing will take place on December 1, 2017 at 10:00 a.m., at 59 rue Court, L’Orignal, ON K0B 1K0. The Lacroix Motion Record and the McCann Motion Record for approval along with the report of mediator Ari Kaplan dated the 28th June 2017 and who facilitated the settlement are posted for review.

You may attend the approval hearing and ask to speak to the Court. Please notify the lawyers if you plan to attend the approval hearing.

The Settlement Amount will be subject to further adjustments to take into account withholding tax, legal fees, disbursements, and taxes on fees and disbursements as approved by the Court (i.e., the “Revised Settlement Amount”).

If the court approves the proposed settlement, Lacroix and McCann class members will be bound by the terms. Individual cheques will be issued to eligible class members for his or her pro rata share of the Revised Settlement Amount based on a factor reflecting the percentage that his or her contributions with interest represent in relation to the total contributions with interest of all class members, for both benefit enhancements.

These cheques will be automatically issued by the Claims Administrator without any requirement on eligible class members to do anything further in order to be eligible for payment (subject to opt-in rights, described below).

Any former employee who left his or her money in the CMHC pension plan and received the benefit enhancements is NOT eligible to claim under either class action.

Don’t like the proposed Lacroix or McCann settlements?

You can object by submitting a written objection letter to the Claims Administrator which must be received by the Claims Administrator no later than November 15th, 2017.