Representing 1,300 Manitoba Workers

Judgement Received on Pension Lawsuit

The Honourable Justice Bryk rendered his Decision with respect to the pending court action which dealt with pension issues which arose as a result of the privatization of Manitoba Telecom Services (MTS). His decision is as follows:

1. The opinion on equivalency as provided by Clifford Fox (the Actuary retained by the Provincial Auditors Office to provide the opinion) is invalid and of no force and effect:
2. MTS shall pay to the Plaintiffs the amount of $43.343 million dollars plus interest at a rate equivalent to the rate of return earned under the New Plan with MTS which interest shall be calculated from January 1, 1997 to the date of payment which payment is to be used to enhance Pension benefits on the understanding that the enhanced benefits will not result in an increase of MTS's costs: and
3. In all other respects, the Plaintiff's claim is dismissed.

The judge has left it to the various parties and their legal council to implement the decision, and if they are unable to come to an agreement, the parties will return to court to possibly adduce further evidence and thereafter make submission as to how the judgement should be implemented. The intended effect is to provide the employees/retirees of the pension plan with $43.343 million to use for benefit improvement but those improvements shall not result in any cost or liability to MTS.

The two primary remedies which were being sought by the plaintiffs and the decision on those points are as follows:
1. Governance - Under the Civil Service Superannuation Plan (CSSP) decisions relating to use of surplus funds within the Plan were made by consensus and the employer did not at any time unilaterally make use of surplus funds. Under the New Plan, MTS was unilaterally making decisions with respect to the use of surplus funds. The Judge rules that each of the two Plans were set up essentially the same way, and even though use of surplus funds was done by consensus under the CSSP, there was no legal obligation on the employer to only make use of those funds by consensus, and as such, the ultimate decision making power with respect to use of surplus remained with the employer. The New Plan is set up in the same way and the Court was therefore not prepared to make a ruling which would prevent MTS from having ultimate decision making power with respect to the use of surplus funds.
In part, the Judge noted that under the CSSP, 100% of any surplus funds existed through employee contributions, whereas, under the New Plan, surplus funds arose through contributions jointly made by the employer and the employees.
The Court also noted that the employer was solely liable for any shortfall with respect to the fund (unfunded liability) whereas the employee liability was not affected by The court also noted that the employer was solely liable for any shortfall with respect to the fund.(unfunded liability) whereas the employee liability was not affected by any shortfall. The decision suggests that the judge felt it was inequitable to take away from the employer, final decision making power with respect to use of surplus, while at the same time leaving the employer solely liable for any shortfall in the fund.

2. Ongoing Surplus - Under the CSSP, all surplus funds were used for benefit improvements. Under the new plan, MTS was using surplus to take contribution holidays whereby MTS was effectively using surplus funds to enable it to take the contribution holiday. The judge ruled that the legislation which governs the funds as well as the plan text which governs the fund permit MTS to use surplus funds to enable it to take contribution holidays. Ultimately, the judge's ruling allows MTS to make use of ongoing surplus funds as it deems appropriate.

The effect of Justice Bryk's decision is that he rejected the opinion of equivalency provided by Mr. Fox and substituted it with his own finding that, the CSSP and the New Plan are equivalent in value subject only to the use of the initial surplus being the amount of $43.343 million dollars. The judge determined that the funds which were transferred from the CSSP to the New Plan exceeded the amount which was contributed to the New Plan by MTS, by the amount of $43.343 million dollars. The judge concluded that since this amount existed solely through employee contributions, that amount must remain for the exclusive benefit of employee/retirees.

The lawyers involved in this court action are reviewing the judgement and will soon make determinations concerning implementation of the judgement as well as decision as to whether or not an appeal will be filed with respect to any aspect of the judgement.