The situation regarding the Pension Plan Surplus

What’s new?

The CBC Pensioners National Association (PNA) and its union partners have asked an arbitrator to take steps to protect our share of the current pension plan surplus.

We have asked the arbitrator Dennis O’Connor to instruct the CBC to set aside an amount of money equal to pensioners’ and employees’ pension surplus entitlement.

The interim order referred to as a “preservation order” is being sought to ensure there are funds available in the event the arbitrator ruled in our favour. It’s expected a hearing on the interim order will be held within the next several weeks.

In the meantime, we have received a variety of questions concerning the nature of the dispute and have prepared a “Frequently Asked Questions” sheet we hope will address some of those questions. This will be posted on our website for reference. You will find the main ones hereafter.

And for more context, please refer to our April 21 communiqué which can be found here

1) Where does that leave us?

As you no doubt know by now, the arbitrator has been asked to determine whether a pension surplus agreement signed in 2009 between the CBC, the PNA, and CBC’s unions remains valid and enforceable. It is obviously our view, and that of the unions, that it is.

2) What’s at stake here?

Immediately at stake is a share of the pension surplus. The basic principle of the agreement is that surpluses must be shared equally between the CBC and those retirees and employees who have contributed to it, i.e. that the two later groups have a right to the equivalent of the contribution holiday which the CBC must take for the rest of the year.

3) Does that mean we should get half of $700 million?

Technically, that would be the case however the agreement only permits retirees and employees to get an amount equal to the amount CBC would be required to contribute to the plan for the rest of the year. In this case, the amount would be somewhere between $40 to $50 million, i.e. the equivalent of the contribution holiday the CBC is forced to take by law.

4) Last time we got a refund on contributions it was considerably more, around $134 million, why is it so much less now?

In 2000, when the last sharing occurred, pension valuations of the plan took place every three years. Now they happen every year. Additionally, in 2000 the CBC’s contribution amount was higher (60% vs 50 % now). So, the amount paid out in 2000 was basically equal to the amount of CBC contribution holiday over a three-year period.

5) Why is the PNA not taking the matter to court as it did before?

At the time of the last surplus, the PNA did not have an agreement with the CBC covering surplus sharing so it only had a civil court process available to it. In this case, we have an agreement on how these matters are to be resolved and we are availing ourselves of it. In fact, the arbitration has already begun and is scheduled to continue in September. Of course, if the arbitrator deems the agreement invalid, we will have access to the courts and the unions could grieve.

6) Why is the arbitration process taking so long?

There is no single answer to that question but basically, it took considerable time to find an arbitrator who met the qualifications demanded by the Memorandum of Agreement. After that, it was a case of finding hearing dates suitable for all parties – the arbitrator, legal counsel, witnesses, and advisors (more than 20 different individuals). It is also not uncommon for arbitration proceedings and for a decision to be provided to take many months. The PNA has advised the arbitrator it will accept any dates proposed in order to expedite the process as much as possible. We are confident the arbitrator appreciates the need for a timely decision.

7) Is my pension secure?

The dispute over the sharing of pension surplus has no bearing on the overall financial status of the plan and its ability to meet its pension obligations. The plan has assets of more than $9-billion and is in excellent shape.