The Supreme Court of Canada has upheld a lower court ruling that the pension surplus that existed when Manitoba Telephone Services (MTS) was privatized in 1997 belongs to the workers and retirees and must be repaid.
The company and its outside advisors are reviewing the implications of the ruling, which it calls “complex.”
Pension benefits are expected to be increased by $43 million, plus interest calculated at a rate equal to the pension plan’s rate of return since 1997, which could increase pension benefits in time by up to $147 million.
As a result of a recent stock sale, MTS expects to have sufficient liquidity to satisfy all of its pension funding obligations.
“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,” says Wayne Demkey, the company’s chief financial officer.
Unifor (formerly the Communications, Energy and Paperworkers union) Local 7, the Telecommunication Employees Association of Manitoba, the International Brotherhood of Electrical Workers and a group of retirees have been fighting this case since 1997.
“This is a great day and a long time coming for the unionized workers at MTS,” says Paul McKie, Unifor’s national representative.
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