Pension Coalition NB and Koskie Minsky LLP bring court proceeding against Province of New Brunswick on behalf of 13,000 pensioners

FREDERICTON, June 30, 2014 /CNW/ - The law firm Koskie Minsky LLP announces today that it is issuing a court application on behalf of over 13,000 pensioners alleging that the Province of New Brunswick has breached their rights under the Canadian Charter of Rights and Freedoms.

When they were younger, these Pensioners worked for the Province. They earned wages and contributed their money toward their compulsory pension plan with the Province. They planned for their retirement and have organized their affairs on the basis of their pensions. They have all since retired and now collect their pensions. The average Pensioner is over age 70 and 2,600 of them are over age 80. The average pension is $21,503 per year, taking into account a 50% survivor's benefit. The pension was indexed to the cost of living.

In December, 2013 the Province passed legislation called An Act Respecting Public Service Pensions. In this legislation, the Province has retroactively revoked and "converted" the pension plan. Going forward, pensions are no longer to be automatically indexed to the cost of living. The indexing component, which Pensioners earned and contributed toward when they were younger, is now conditional and discretionary.

Clifford Kennedy, one of the applicants and the spokesperson for Pension Coalition NB, said "this legislation has an inordinately adverse impact upon retirees who, due to their age, health or personal reasons, are not in a position to replace the lost income they previously earned and expect to cover their cost of living."  

Pensioners budget for their cost-of-living adjustments. They rely on these annual escalations to help provide for themselves. Pensioners on fixed incomes are living longer and their actual costs of living are increasing every year at a rate greater than the Consumer Price Index. The effect that An Act Respecting Public Service Pensions has on the lives of these people violates each Pensioner's right to life, and security of their person, contrary to section 7 of the Canadian Charter of Rights and Freedoms. This legislation discriminates against Pensioners, who are vulnerable, on the basis of their age, in violation of section 15 of the Charter and is not demonstrably justifiable in a free and democratic society.

"A pensioner requires as much financial certainty as possible as they budget for the end of their lives", says Ari Kaplan of Koskie Minsky LLP, lead lawyer for the applicants. "Before the Crown expropriates the retirement savings of older persons and redistributes their money to the public good to balance the budget, it must satisfy itself, through rigorous consideration of alternatives, that the policy is proportionate to its objective and there is no other rational policy alternative available". In this case, Pensioners say that the Province ignored calls to study alternatives, opting instead for a "fix" to get the pension liability "off the books".

The Province cannot accomplish its objective of ignoring these pension costs. Bernard Dussault, former Chief Actuary of Canada, says that credit rating agencies evaluating the finances of the Province should view all or part of the new conditional indexing as an actual liability and should assess it that way when assessing the Province's creditworthiness. "I believe the Province is inappropriately hiding its liabilities based upon unrealistic accounting measures which artificially restore the Province's credibility on the financial markets", says Mr. Dussault.

Mr. Kaplan added, "The Province has done what no private employer in the country has the unilateral authority to do, namely, legislate a revocation of vested pension benefits – which is a protected foundation stone of our pension system – while immunizing itself from all liability from the courts". This was arbitrary, overbroad and disproportionate state action, mismatching a legislative objective with the means chosen to achieve it.

In addition to asserting their rights under the Canadian Charter of Rights and Freedoms, the applicants state that the Province has contravened the Taxpayer Protection Act. This Act requires the Province to hold a public referendum before it introduces a new tax in the Legislature. In this case, An Act Respecting Public Service Pensions puts a tax on Pensioners' benefits, and converts over $600 million of Pensioners' retirement savings to the Consolidated Fund. In doing so, the Province has isolated Pensioners, who are also taxpayers, from the general public and have made them feel adverse in interest to their own neighbours, families and friends.

Mr. Kennedy stated that "the Alward government has broken its contract with public service pensioners and we intend to continue our efforts to ensure government honours its promise to retirees". 

Pension Coalition NB has called a press conference for Monday, June 30, 2014 at 11:00 a.m. (Atlantic), at the Delta Fredericton, governor's ballroom. In attendance will be counsel Ari Kaplan and representatives of the Coalition and other pensioners.

Koskie Minsky LLP, based in Toronto, is one of Canada's most experienced pension litigation firms in the area of class actions, pensions, labour, and employment.

The firm of Whitehead, Bird & Miles, of Fredericton, is local counsel on this case.

For more information, please visit the Coalition's website at: http://www.pensioncoalitionnb.ca

SOURCE: Koskie Minsky LLP

Media contact: Ari Kaplan, counsel, [email protected], 416-595-2087