Canada’s top court has ruled that a $43 million pension surplus from 1997 must be paid to workers and retirees
The Supreme Court of Canada has upheld a lower court ruling that a pension surplus of $43.3-million that existed when the Manitoba Telephone System was privatized in 1997, belongs to the workers and retirees, and must be repaid.
Unions and employees have been disputing the company’s use of the funds for more than 15 years and Unifor national representative Paul McKie said the result had been “a long time coming.”
"A 17-year battle to wrestle back from a corporation, money that belonged to the workers," McKie said. "Many people in the three unions, the retiree's group, our legal team, worked tirelessly to get justice for our MTS members and their pension.”
The court reinstated the decision of the trial judge, that the parties negotiate utilization of the funds and arrive at a mutually agreeable implementation process, or submit further evidence for the court to consider.
McKie said the Supreme court also ordered that costs throughout the proceedings be paid on a solicitor and client basis out of the new plan trust fund, “meaning all legal costs incurred by the unions shall be repaid.”
"This decision is a strong indication from the highest court in the country that pension surpluses cannot be used as corporate slush funds," said Jerry Dias. "It reinforces the idea that pensions are a deferred wage, agreed to as part of a contract promised to the worker for their efforts."
Manitoba Telecom Services (MTS) was reviewing with outside advisers the implications of the ruling, which it described as "complex" and would require further negotiations with the plaintiffs before the definitive impacts on the MTS pension plan and the company are known with certainty. However, the company also confirmed that it “expected to have sufficient liquidity to satisfy all its pension funding obligations" and to maintain its current credit rating.
"This is a very disappointing outcome, but we were prepared for this scenario and are confident that should we need to make additional pension payments this year, we can fully manage its financial impact while maintaining our long-term strategy for delivering shareholder value," said Wayne Demkey, chief financial officer at MTS Allstream.
Unifor national president Jerry Dias said the decision was a “strong indication” that pension surpluses could not be used as corporate slush funds.
"It reinforces the idea that pensions are a deferred wage, agreed to as part of a contract promised to the worker for their efforts,” he added.
Unions and employees have been disputing the company’s use of the funds for more than 15 years and Unifor national representative Paul McKie said the result had been “a long time coming.”
"A 17-year battle to wrestle back from a corporation, money that belonged to the workers," McKie said. "Many people in the three unions, the retiree's group, our legal team, worked tirelessly to get justice for our MTS members and their pension.”
The court reinstated the decision of the trial judge, that the parties negotiate utilization of the funds and arrive at a mutually agreeable implementation process, or submit further evidence for the court to consider.
McKie said the Supreme court also ordered that costs throughout the proceedings be paid on a solicitor and client basis out of the new plan trust fund, “meaning all legal costs incurred by the unions shall be repaid.”
"This decision is a strong indication from the highest court in the country that pension surpluses cannot be used as corporate slush funds," said Jerry Dias. "It reinforces the idea that pensions are a deferred wage, agreed to as part of a contract promised to the worker for their efforts."
Manitoba Telecom Services (MTS) was reviewing with outside advisers the implications of the ruling, which it described as "complex" and would require further negotiations with the plaintiffs before the definitive impacts on the MTS pension plan and the company are known with certainty. However, the company also confirmed that it “expected to have sufficient liquidity to satisfy all its pension funding obligations" and to maintain its current credit rating.
"This is a very disappointing outcome, but we were prepared for this scenario and are confident that should we need to make additional pension payments this year, we can fully manage its financial impact while maintaining our long-term strategy for delivering shareholder value," said Wayne Demkey, chief financial officer at MTS Allstream.
Unifor national president Jerry Dias said the decision was a “strong indication” that pension surpluses could not be used as corporate slush funds.
"It reinforces the idea that pensions are a deferred wage, agreed to as part of a contract promised to the worker for their efforts,” he added.