Canada’s Highest Court Upholds Pensioner Rights
February 14, 2014
The Supreme Court of Canada struck a blow for pensioner rights Jan. 30, reinstating a lower court’s decision that a $43 million pension surplus that existed when Manitoba Telephone was privatized in 1997 belonged exclusively to retirees.
The provincial telecom company, now known as MTS Allstream Inc., switched over from a government-sponsored pension plan to a private one when it was sold to private shareholders 17 years ago. At the time, the plan reported a $43.3 million surplus in Canadian dollars (or close to 40 million U.S. dollars) which was supposed to be paid out to existing and future retirees.
Current workers paid into the account, with every dollar in the surplus contributed by employees, not the company. MTS made its contributions on the back end, covering half of every retiree monthly payment.
“It was our money and our money alone,” said Winnipeg Local 435 Business Manager Bruce Krause.
The IBEW and two other unions – Unifor and Telecommunication Employees Association of Manitoba Inc. – along with a group of retirees discovered that the surplus was gone, with the company wrongfully making use of the fund to cover the cost for its pension contributions.
“We’re talking more than a decade of lost interest,” said Krause, who represents more than 700 active MTS employees. “That’s money that could have been have used for benefits.”
The court agreed. “Only MTS benefited from this excess contribution and plan members received no enhanced benefits funded by excess contributions,” Justice Marshall Rothstein wrote in the court’s decision.
The unions sued the company and a provincial court found MTS liable for the $43 million. An appellate court reversed the decision, but the Supreme Court upheld the Manitoba judge’s initial ruling.
The court also ordered all the union’s legal fees to be repaid.
MTS will be required to return the $43 million, plus interest, to the plan, which could increase the fund by upwards of $140 million.
Local 435 President and Pension Representative Don Senkow said this is a huge victory for pensioners’ rights in Canada, particularly for retirees at privatized companies.
“It says we have rights, regardless if we’re in the public or private sector,” he said.