Supreme Court Hears Appeal in Pension Surplus Appropriation Case

Pension Surplus

Feb 24, 2012

On February 9^th 2012, public service unions appealed to the Supreme Court to overturn the Ontario Court of Appeal’s ruling that the federal government had the right to appropriate $30 billion from the employees’ superannuation fund in 1999.

Lawyers representing public service employees argued that:

the Superannuation Accounts held real assets that the plan members contributed into
since members contributed into the account, the surplus was partly owned by the members
the government owed a fiduciary duty to Plan members regarding those assets
the Public Service Superannuation Act (PSSA) did not explicitly allow the government to appropriate the surplus or to use it for any purpose other than members’ pensions

Therefore, the government used the Superannuation Accounts surplus illegally to give itself a contribution holiday and reduce the deficit.

The government argued that:

there were no actual assets in the Superannuation Accounts; the government characterized the surplus as merely “over-estimated liabilities”
contributions were transferred to the Consolidated Revenue Fund and became the government’s property to do with as it saw fit
according to public service pension legislation, plan members only have a right to the pension benefits; which they continue to receive
PSSA legislation did not establish a fiduciary or trust relationship

The government denied having taken a contribution holiday, and explained that its contributions were always merely an accounting ledger activity.

The Supreme Court judges will debate the case until they render a judgement. Supreme Court judgments on appeal generally take an average of six months to deliberate.

Date: 2012-02-22T00:00:00