Media Advisory

February 23, 2007

$30-billion pension surplus grab trial to resume Feb. 26

Ottawa – The plaintiffs in the federal pension surplus litigation will proceed to court on Monday to present evidence and opening arguments. 

The trial resumes after the plaintiffs won in the first phase of the case more than one year ago, allowing them to present 128 government documents as evidence.  The government had tried to block this evidence in an apparent attempt to delay proceedings.  Last week, the plaintiffs sent a letter to the Prime Minister asking him to intervene, but they have received no response.

The 18 unions, employee associations and retiree groups maintain that the government’s expropriation of the $30-billion surplus is akin to an employer taking money from the paycheques of workers and using it to pay off the company’s debts.

 The President of the Professional Institute of the Public Service of Canada (PIPSC), Michèle Demers, and the National President of the Public Service Alliance of Canada (PSAC), John Gordon, will be in Court on Monday morning and will be available for media comment.

When:
Monday, February 26, 2007, 10 a.m.

Where:
Ontario Court of Justice
161 Elgin Street
Ottawa, ON

Room number will be listed at reception on ground floor, near elevators

Media Contacts:
Joselito Calugay, PSAC Communications Officer,
(613) 293-9324

Francine Pressault, Media & Government Relations Officer,
PIPSC, (613)-228-6310, ext. 2228

10-230207

Background:

1. 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.

2. 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.

3. 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.

4. 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.

5. On November 8, 1999, unions representing workers affected by Bill C-78, employee associations and retiree groups filed a lawsuit against the federal government. 

6. 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 Bill C-78 has on the families of the workers.

7. 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.

8. The first phase of the trial began on November 15, 2005, and lasted four days as lawyers for the government tried to block 128 government documents from being presented as evidence.  It was an apparent attempt to force the unions to call the authors of all the documents during the trial, which would have created serious delays in the six-year-old case.  On December 2006, the Court rules that the 128 documents are admissible as evidence, marking a victory in the first phase for the plaintiffs.

9. 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:

1. The Government violated its legal obligation to use the surplus in the best interest of federal public sector workers and retirees.

2. 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.

3. 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.

4. Bill C-78 discriminates against public sector workers under Canada’s Charter of Rights and Freedoms