General Motors and General Dynamics Pension Class Action

In the spring of 2003, employees from the military defence-based business of General Motors of Canada Limited (“GM”) transitioned their employment to General Dynamics Land Systems – Canada Corporation (“GD”). The class action sought relief for 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.

The claim alleged that the salaried employees’ pension plans at GM and GD did not interact 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”.

A settlement was reached between the parties to resolve the litigation. The settlement required GD to amend the pension plan in order to provide 100% of the “wrap-around benefit” to Class Members. The wraparound amendments were made to the GD plan on an indefinite basis.

Following the implementation of the Court approved settlement, Class Counsel identified that a shortfall continued to occur in the pension benefits received by certain Class Members. Class Counsel successfully brought a motion before the Court to enforce the terms of the settlement. A new settlement implementation agreement was entered into between the parties, and the settlement was administered in 2015.