Legal News

Age-related benefit plan reductions not contrary to the Charter

The British Columbia Court of Appeal has confirmed that age-related reductions to employee benefit plans do not constitute discrimination contrary to section15 of the Canadian Charter of Rights and Freedoms, which prohibits discrimination on the basis of age.

The case involved a class action challenge to two public service benefit plans. The plans each provide a Supplementary Death Benefit payment to spouses of deceased plan members. The Benefit was reduced by ten percent for each year beyond a certain age a plan member was at death.

Spouses receiving a reduced sum argued that the inequality was based on age. They said the plan implied that the emotional and financial problems associated with the death of an older partner was less worthy of support than the problems associated with the death of a younger one.

At trial, the British Columbia Supreme Court found that the reduction provisions of the benefit plans did not violate section 15 of the Charter and dismissed the claims.

On appeal, the majority of the Court of Appeal agreed with the trial judge and upheld the constitutionality of the legislation. The Court considered the Benefit in the context of the entire pension scheme and found that, although the partners of older plan members received lower payments based on the age of the participants, they also received survivor pensions and other benefits not available to the spouses of younger members.

The Court noted that the different schemes were intended to address different economic needs. For survivors of younger spouses, the lump-sum Benefit provides a short-term stream of income in the event of an unexpected death. For survivors of older spouses, the Benefit is intended to cover the expenses associated with a last illness and death. For these spouses, a long term stream of income is additionally provided in the form of a pension.

Although this case addresses government provided benefits, the Charter also informs provincial human rights legislation. This decision may therefore be of interest to all employers with private benefit plans which offer benefits which may be reduced on account of age.

Withler v. Canada (Attorney General), 2008 BCCA 539