Canada wins $28.3 billion case on pension fund payments

Wed Dec 19, 2012 10:58am EST
 

OTTAWA (Reuters) - The Canadian government won a far-reaching case at the Supreme Court of Canada on Wednesday when judges ruled Ottawa did not have to return more than C$28 billion ($28.3 billion) to civil servant union pension plans.

The unions said the federal government had improperly taken the money out of their plans, largely through withdrawal of surpluses. Ottawa said it had followed laws governing the pensions and that, in any case, it would meet its obligation to pay union members the defined benefits they were owed.

In a unanimous 9-0 ruling, the Supreme Court said the unions did not have a legal interest in the pension plan's surpluses.

"The plan members' interests are limited to their interest in the defined benefits to which they are entitled under the plans," the court said in its judgment.

"The government was not under a fiduciary obligation to the plan members, nor was it unjustly enriched by the amortization and removal of the pension surpluses."

The judgment was not a surprise, since the unions had lost in two lower courts. A law passed in 2000 gave the government the right to remove surpluses from the pension funds and use the money for whatever purpose it saw fit.

The Canadian Association of Professional Employees said the ruling meant union members would have to pay larger contributions over longer periods of time.

"A portion of the accumulated funds to ensure the continued viability of their pension plans was used for other purposes by their employer," it said in a statement.

The federal government was not immediately available for comment.

(Reporting by David Ljunggren; Editing by Lisa Von Ahn)