CANADA - The C$30bn pension surplus litigation trial under which 18 unions, employee associations and retiree groups are suing the Canadian federal government, kicked off today.
The case arose in 1999, when the groups’ filed a lawsuit against the federal government regarding the “expropriation” of the federal public service pension surplus.
Three law firms – Nelligan O’Brien Payne, Raven Cameron Ballantyne Yazbeck, and Sack Goldblatt Mitchell – have represented the more than 300,000 combined members.
By 1999, the pension plans of federal public sector workers had accumulated a combined surplus of $30.2bn. According to the Public Service Alliance of Canada (PSAC), one of the main reasons behind this 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 September 14, 1999, parliament passed the Public Sector Pension Investment Board Act, which, said the PSAC, allowed the federal government to take the surplus.
“The federal government is exempted from the Pension Benefits Standards Act, which limits employer access to any surplus in federally registered pension plans,” the alliance said.
“The Act 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 accumulated a surplus in the future,” the PSAC said.
On its site, Nelligan O’Brien Payne described the lawsuit as “the most significant case of its kind in Canadian history.”
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