The litigation trial involving the federal government's $30.2-billion
expropriation of the federal public
service pension surplus has begun. The lawsuit is the most significant
case of its kind in Canadian history.
Three law firms - 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
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.
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.
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