Government workers suing over pensions

back

Support Global Action on Aging!

Thanks!

Government workers suing over pensions

By Barb Pacholik

Regina Leader Post, April 30 2003

More than $100 million is at stake in a class-action lawsuit launched on behalf of 10,000 members in an underfunded Saskatchewan government pension plan.

Regina lawyer Gord Kuski, who represents the plaintiffs, said pensions are being paid, but there's no money to enhance the benefits. "Without appropriate indexing, meaning cost of living increases, each pensioner's ability to make ends meet erodes as each year passes. So they're on a very slippery slope right now."

Finance Department spokesman Mike Woods said the government is meeting its obligations.

"All pensioners are receiving the benefits to which they are entitled," he said. Woods declined further comment while the lawsuit is outstanding.

The first step will be to ask a judge to certify the claim as a class action, meaning the issues need only be tried once since they are common to all the potential plaintiffs.

At issue is the Public Service Superannuation Plan (PSSP), which has 8,000 members drawing pensions and about 2,100 still working who will be entitled to a pension on retirement.

The lawsuit, filed recently with Court of Queen's Bench in Regina, claims the government has contributed only $2.8 million to the PSSP, compared to more than $100 million contributed by civil servants.

"It was an obligation of the government to make matching contributions to the plan," the lawsuit contends.

A statement of claim, which launches a suit, contains allegations expected to be proven in court.

A statement of defence, rebutting the claims, has not yet been filed.

Kuski, who handled a multi-million dollar battle for the Regina police over its pension plan, said the PSSP has "a significant unfunded liability that the government uses for a justification in not enhancing pension benefits."

An unfunded liability occurs when commitments exceed the projected assets. "They're saying, 'the cupboards bare.' And we're saying, 'well, if the cupboards bare, it's your fault.' "

In a report to the legislature's public accounts committee in March 2001, Finance Department officials admitted the plan's unfunded liability was an estimated $1.2 billion.

The government created the PSSP in 1927.

It was replaced 50 years later, and employees had the option of moving into a new plan or remaining in the PSSP.

PSSP members accuse the government of breaching its obligation by failing to match employee contributions and establishing a separate pension fund. "They just received the employees contributions, put it into their general revenues, and then took on itself an obligation to pay the pensions when they became payable -- again out of the general revenues," Kuski said.

The suit contends the plan was hurt financially by government actions. When the plan was replaced, no new employees were paying into it. Also "downsizing" meant employees were retiring and collecting benefits sooner, but also paying less into the plan.

The lawsuit also takes the province to task for allegedly "erroneous and misleading reports." The PSSP members aren't alone in that criticism.

At a 2001 public accounts committee meeting, provincial auditor's staff said the government wasn't recording all the costs related to the pension funds or their unfunded liability in its general revenue fund financial statements.

"You need to have some way to tell people how you're going to manage the cash flows for this in the future. This is debt just like any other debt," provincial auditor Fred Wendel said Monday.

At that 2001 meeting, finance officials maintained liabilities in the PSSP and a teachers' pension fund would be eliminated in 60 years, and in the meantime, payments are "manageable and affordable."