In September 2007, a review of the Public Service Group Insurance Fund revealed an actuarial surplus of approximately $10 million. Based on past practice, the Superannuation Liaison Negotiating Committee (made up of unions, like the MGEU, who represent members participating in the Civil Service Superannuation plan), and the Employer Advisory Committee (made up of participating employers) decided to distribute the employee portion of this surplus to members and increase the paid-up insurance for retirees from $4500 to $5000. Both sides agreed that the employer portion of the surplus would be dealt with at a later date.

However, when the unions signed off on the agreement in August 2008, targeting an October 2008 distribution, the employers decided they would no longer be willing to sign off on the employee portion, unless the unions agreed to sign off on the employer share as well. This was not part of the original agreement so the unions asked for assurance that the money would be used to fund future benefits for union members, rather than return to general revenue. The Superannuation Liaison committee also obtained a legal opinion, which stated that the employee surplus should be distributed in accordance with the original negotiated agreement.

In December 2008, the financial statements (for the period ending April 2008) were released, showing that an increase in claims and a decrease in investment income from the global financial collapse had, in fact, drained the surplus and put the plan in a deficit position.

Recently, MGEU representatives met with the employer, which included discussions about whether it was prudent to continue with the distribution of the surplus, given the uncertainty in the markets and the plan’s current position. The actuary estimates say the deficit for the plan is at approximately $5 million.

The MGEU is currently talking with the other unions on the committee and setting up meeting dates with the employers to review the situation and determine whether going ahead with the surplus distribution is prudent, if a more timely process can be negotiated for future distributions, and if more frequent actuarial reviews are required. The MGEU will continue to keep members informed as this process unfolds.