Media Advisory

Pension Surplus

Nov 14, 2005

Trial to begin on government’s $30B plunder of federal public service pension surplus

Ottawa – The litigation trial involving the federal government’s $30.2-billion expropriation of the federal public service pension surplus will begin tomorrow. The lawsuit is the most significant case of its kind in Canadian history. Three law firms Nelligan O’Brien Payne, Raven Cameron Ballantyne Yazbeck, and Sack Goldblatt Mitchell will represent 18 unions, employee associations and retiree groups representing more than 300,000 combined memberships.A copy of the Statement of Claim submitted for the trial can be obtained from: www.acep-cape.ca, www.nelligan.ca and www.psac-afpc.org/home-e.shtml .

When: Tuesday, November 15, 2005 10 a.m.
Where: Ontario Court of Justice, 161 Elgin Street, Ottawa, ON
Media contact: Julie Beaucaire, Nelligan O’Brien Payne LLP
Tel: (613) 231-8209
e-mail: julie.beaucaire@nelligan.ca

Background:

By 1999, the pension plans of federal public sector workers (public service, RCMP and
Canadian Forces employees), had accumulated a combined surplus of $30.2 billion.
One of the main contributors to the surplus was the fact that the workers were paying into the pension fund based on calculations that assumed workers were receiving annual wage increases, when in fact they had a legislated six-year salary freeze in the 1990s. On average, federal public sector workers pay higher contributions to their pension plans compared to private sector workers.
On September 14, 1999, Parliament passed the Public Sector Pension Investment Board Act
(Bill C-78), which introduced amendments to the laws covering the three pension plans, allowing the federal government to grab the $30.2-billion surplus. The federal government is exempted from the Pension Benefits Standards Act, which limits employer access to any surplus in federally registered pension plans.
Bill C-78 also gave Government the authority to raise the mandatory employee contributions
in case of a shortfall and to reduce or cease employer contributions if the pension fund accumulates a surplus in the future.
On November 8, 1999, unions representing workers affected by Bill C-78, employee associations and retiree groups filed a lawsuit against the federal government.
In total, 670,000 Canadians – or 1 in 50 Canadians across the country – are directly affected by Bill C-78. However, millions of Canadians are also affected, considering the impact the legislation has on the families of the workers.
On top of the pension grab, on July 7, 2005, the federal government imposed yearly increases in employee contribution rates for the next eight years.
There are 18 organizations involved in the lawsuit:
- Association of Canadian Financial Officers
- Canadian Air Traffic Control Association (CAW Local 5454)
- Canadian Association of Professional Employees
- Canadian Auto Workers (Local 2182)
- Canadian Federal Pilots Association
- Canadian Merchant Service Guild
- Canadian Military Colleges Faculty Association Communications
- Energy and Paperworkers Union of Canada
- Federal Dockyard Chargehands Association
- Federal Government Dockyard Trades and Labour Council (East)
- Federal Government Dockyard Trades and Labour Council (West)
- Federal Superannuates National Association
- International Brotherhood of Electrical Workers (Local 2228)
- Professional Association of Foreign Service Officers
- Professional Institute of the Public Service of Canada
- Public Service Alliance of Canada
- Research Council Employees’ Association
- Union of Canadian Correctional Officers – Syndicat des agents correctionnels du Canada – CSN

The following arguments will be laid out during the trial:

The Government violated its legal obligation to use the surplus in the best interest of federal public sector workers and retirees.
The Government’s action constitutes a breach of contract in that the pension fund is part of the terms and conditions of employment governing public sector workers.
Since the active and retired pension plan members contributed in part to bring about the surplus, they are at least entitled to a part of it based equitably on their share of contributions.
Bill C-78 discriminates against public sector workers under Canada’s Charter of Rights and Freedoms.

Date: 2005-11-14T00:00:00