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Where is the case at?
Three lawsuits challenging the Government’s taking of the surplus in the Public Service Superannuation Plan; the RCMP Superannuation Plan and the Armed Forces Superannuation Plan are being pursued jointly by Court Order. The Ontario Superior Court has ruled that is has jurisdiction to hear the cases and that the federal unions (including APSFA) pursuing the case are entitled to do so to protect the interests of public servants and other federal government employees. The lawsuits are now at the “discovery” stage. The Government has disclosed several thousand documents relevant to the issues in the case and all of these documents have been reviewed. These documents include financial data and analyses of the plans as well as hundreds of documents, many at the senior level, dealing with the Government’s strategy for dealing with pension surplus. The availability of some cabinet documents remains unresolved.
Once review of the documents was completed, the oral examination phase of the discovery process commenced. The former head of the Pension Division at Treasury Board was examined under oath for a total of 10 days in February and April 2003, and the Comptroller-General has been examined on accounting and financial issues for several days in March and April. It is expected that examinations will be completed in the fall of this year.
When will the case be heard in Court?
Once the discovery phase is complete, the Court will schedule a Settlement Conference and assign a trial date. It is unlikely that the case will be tried before the fall of 2004.
What have we learned?
The discovery process has shed a great deal of light on how and why the Government dealt with the surplus as it did. Briefly, we now know that the Government’s approach to dealing with the surplus was intimately linked to its desire to reduce the federal budget deficit in the mid-1990’s. The Government discovered that accounting rules permitted it to quietly “amortize” the surplus and reduce the size of the stated budget deficit, even though the balances reported in the Superannuation Accounts would not be reduced. The net result, which was effectively hidden from employees, was the equivalent of a contribution holiday for the Government for much of the decade – a period in which employees continued to make their contributions in full. To make matters worse, one of the basic reasons for the emergence of the surplus in the first place was wage restraint and salary freezes! By 1995, $14 billion in surplus was already built into the Government’s internal plan to reduce the deficit. None of these manoeuvres were disclosed to Treasury Board’s Advisory Committee on Pension Reform, which included members from the federal unions.
In 1999, Treasury Board proposed a new “pension deal”, but the Department of Finance refused to permit any discussion of sharing of surplus or transferring of the existing surplus to the new pension fund. Although it didn’t say so at the time, the Government needed to use the surplus to meet its deficit reduction targets. When the employee side refused to agree to the Government’s “deal”, Bill C-78 was the Government’s answer. Under this version of “pension reform”, employee contributions increased and the Government retained all the surplus which had by 2000 grown to about $30 billion.
Because it involves statutory pension plans, the case presents a number of new and groundbreaking issues. We remain committed to pursuing the case and to reversing the largest surplus grab in Canada.