Pension Surplus Trial Update

March 21, 2007 The second phase of the pension surplus trial challenging the federal government’s confiscation of over $30 billion of surplus in the Canadian Forces, RCMP and Public Service superannuation plans began on February 26, 2007 before Justice Panet of the Ontario Superior Court of Justice.
The trial commenced with opening statements from lawyers for the employee/retiree groups and the government. The legal team for the government has recently expanded to 6 lawyers including senior Toronto litigator Alan Lenczner. In their opening statement, the government lawyers emphasized that they will be taking the position that the surplus is not real. They argue that the superannuation accounts consist of accounting entries and are just devices to track the government’s liabilities. The government lawyers also repeatedly pointed to the generosity of the benefits under the pension plans, the implication being that the employees and retirees are not entitled to anything further.
Following opening statements, the lawyers for the employee/retiree groups called their first three witnesses, independent actuary John Christie, public accountant Scott Milne and pension analyst Don Lee. Christie was on the witness stand for three days and testified about the funding and management of the pension plan, including the government’s amortization of the surplus during the 1990s. According to Christie, this amortization amounted to unauthorized contribution holidays by the government.
“Mr. Christie’s testimony has certainly shed some light on what the government supposedly did with our pension,” said José Aggrey, CAPE President. “I think that it is now time for the government to seriously contemplate settling this case.”
Christie also stated that the superannuation accounts have real assets and pointed to the large increases in the employee contributions to the plans which began in 1999 and will continue until 2013. “It was inappropriate,” said Mr. Aggrey, “for the government to significantly increase employees contributions by 21% by the introduction of Bill C-78, in 1999.”
The second witness, Scott Milne explained how the superannuation accounts are treated under the public accounts of Canada and like Christie told the court that it was his professional opinion that the superannuation accounts contain real assets. Pension analyst Don Lee testified about the amount of pension surplus that is attributable to employee and pensioner contributions in each of the three superannuation plans.
The trial broke for a week over the March break and is scheduled to resume during the week of March 19th with the final three witnesses for the employee/retiree groups, RCMP historian Dr. Steve Hewitt, military historian Dr. Allan English and public sector labour relations expert, John Fryer. Currently the trial is also scheduled to proceed during the weeks of March 26th, April 2nd, April 9, April 30, May 7 and May 14, but changes could be made to that schedule as the trial progresses. The trial is open to the public and takes place in court room 34 at the court house in Ottawa located at the corner of Elgin and Laurier.