Royal Bank retirees fight for benefits

Their case is expected to come up for hearing this month .

In two separate lawsuits, bank retirees Stephen Noel McCarthy and Vesta Dillon, who joined the bank in the 1970s right out of secondary school, contend that the bank made a number of confusing and poorly explained changes to the bylaws of its pension plan that have left many pensioners with thousands of dollars less in annual entitlement than should have been the case .

They are being represented by attorneys Terrence Bharath and Andre Le Blanc .

The retired bankers say a decision by the bank to offer $36.50 per unit for units they hold in the institution’s Staff Retirement Bonus Plan (SRBP) as opposed to the prevailing rate of the units at the time of retirement was unreasonable .

They insist that they are beneficiaries, under various trusts, to what was due to them under the Employee Stock Ownership Plan (ESOP) and the SRBP, and the bank was not entitled to unilaterally lock in the value of the units in the retirement plan .

The retirees are contending that the bank had lost sight that it acted as trustee of shares owned by the employees, and was liable to them .

According to the lawsuit, the bank’s ESOP was established in 1976 .

To purchase shares, the bank received funding partly from the SRBP which provided the ESOP with ten percent of the annual salary of employees .

This was done in 1986, one year after the SRBP was established, offering all full-time employees of the bank automatic eligibility to become members effective from October 1, 1984 .

To become members of the plan, employees were required to apply for membership with the amounts contributed to the plan to be used to purchase units in the ESOP at the prevailing market rate .

The funds in the plan were to be reinvested in securities and members would receive annual dividends based on their assets and upon retirement, they would receive the dollar amount equivalent to that which was put into the plan, minus any withdrawals or the equivalent of the market value of their units whichever was the greater .

Employees were given two options — the first being that the total dividends declared would be credited to the Deferred Compensation Savings Plan from which after one year employees would be permitted to borrow 95 percent of the dividends; the remaining five percent would stay as an accumulation in the fund until retirement or resignation .

The second option allowed employees to purchase voluntary life insurance cover to a certain maximum amount with the difference between the annual dividend and the cost of the insurance cover credited to the Deferred Compensation Savings Plan under the same conditions .

By 1991, the SRBP comprised 1,329 staff members and controlled 12,357,727 bank stock units out of the total ESOP holdings of 13,279,003 bank stock units and the bank had indicated that the two plans were distinctly separate .

By 1999, the bank indicated in its annual report that there was a stock split and the bank’s share price was adjusted downwards by 50 percent but should have doubled the holdings of each shareholder of the bank and member of the SRBP, the lawsuit contended .

They said they were never told of the stock split and never got the benefit of the split shares to which they are entitled .

The two further contended that in June 1999, employees were told of the bank’s decision to wind up the SRBP and replace it with a new staff retirement bonus plan (RBTT Pension Fund Plan)