Manitoba Telecom Services Inc. and subsidiary MTS Allstream must repay C$43 million (US$38 million) to participants of the C$1.4 billion MTS Pension Plan, Winnipeg, the Supreme Court of Canada ruled on Thursday.
The high court upheld a previous ruling by the Manitoba Court of Appeals that said the C$43 million was a pension surplus when the company was privatized in 1997. “MTS has been able to use the initial surplus to take contribution holidays, which allowed it to offset contributions it would otherwise be required to make to the pension fund,” according to the Supreme Court’s ruling. It said that was contrary to assurances from MTS and the Manitoba government at the time of privatization “that any surplus that existed in the old pension fund at the time of privatization would not be used to reduce MTS’ cost of, and share of contributions to, the new pension plan.”
Plaintiffs in the case were a retiree group and unions representing MTS workers — Unifor Local 7, Telecommunication Employees Association of Manitoba and International Brotherhood of Electrical Workers Local 435.
In a statement on the company’s website, Wayne Demkey, CFO at MTS, called the decision “a very disappointing outcome,” but said the company was “prepared for this scenario, and (we) 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.”