Federal Government and Actuary Liable in Pension Scheme

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The Ontario Court of Appeal released its decision in Ault v. Canada (Attorney General) 2011 ONCA 147 on February 28, 2011. This case concerned an actuarial get-rich-quick scheme under which federal government employees would resign from employment and be hired by a company set up by an actuary, in order to be entitled to a higher pension transfer value from the federal Public Service Superannuation Plan. The employees would resign from the other company as soon as the pension transfer was completed.

In order to reap these supposed benefits, the actuary set up a reciprocal transfer agreement between the federal government and the other company. Under this sort of agreement, the transfer value payable upon termination of employment from the federal government is greater than it otherwise would be. The federal government had concerns about the scheme, as did the Canada Revenue Agency. The CRA eventually revoked the registration of the pension plan set up by the actuary. This decision was upheld by the Federal Court of Appeal.

As a result of the revocation of the pension plan, the pension transfers were not permitted. Consequently, the employees who had resigned their positions with the federal government were left without employment and without the amount of pension monies they expected to receive, on the basis of advice from both the federal government and the actuary. The employees brought an action against both parties, to recover their losses. They claimed damages flowing from negligent misrepresentation and breach of fiduciary duties.

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