A retired lieutenant in the naval reserve has launched a $100-million lawsuit against the Canadian Armed Forces for “chronic, excessive and unreasonable” delay in paying discharged members their pension benefits.
Donald Jost, 50, has commenced a proposed class proceeding on behalf of all members of the regular and reserve Canadian forces who were discharged as of March 1, 2007, with entitlements to pension benefits.
“Since 2007, the Armed Forces have been plagued by a series of mismanagement problems that led to delays of weeks, months and sometimes years before receiving their pension benefits,” says Jody Brown, an associate at Koskie Minsky LLP in Toronto, who represents Jost alongside colleague Kirk Baert.
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A claim filed with the Ontario Superior Court on June 30 says that at the end of fiscal 2010/11, the government had processed only 757 of 11,090 reservists’ pension claims. The expectation was it would address the issue by the 2013/14 fiscal year.
By February 2012, however, it had processed only 1,321 of 12,201 claims. In July 2016, Public Services and Procurement Canada, which had assumed responsibility for processing military pensions, estimated the backlog at 5,264 applications. The new completion date was December 2017.
Brown alleges the difficulties began when the forces introduced a reserve force pension in 2007 alongside its pre-existing plan for the regular force. Both plans are defined benefit plans. The regular plan currently has 86,007 retired members. The reserve plan has 596 members. Retired members who qualify under the plan can take immediate annuities upon retirement. They also have the option to receive deferred annuities that they can convert to lump-sum payments.
In the face of continuing delays in payment of benefits under the reserve plan, the auditor general concluded that Department of National Defence had introduced the new arrangement without adequate planning. In particular, the auditor general concluded that no senior official had responsibility for the plan’s introduction; the reservists didn’t receive adequate information to choose among their options; pay and service records were lacking; and administrative staff workloads had increased substantially even as personnel were learning new business rules and system tools. The Department of National Defence acknowledged the findings and agreed with the auditor’s recommendations.
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“The difficulty was that resources were shifted to administer the reserve plan when what was really needed was to add new resources,” says Brown.
But the delays persisted. By April 1, 2016, the Department of National Defence and the Canadian Forces ombudsman had received 1,300 complaints since 2007. The ombudsman noted the average payment timeline for reservists ranged from four to 36 weeks and between three to 14 weeks for regular forces. Defence Minister Harjit Sajjan called the backlog “absolutely unacceptable.”
For his part, Jost had spent some 25 years in the navy. In April 2015, as required, he gave two months’ notice of his impending discharge. At the time, he was 48 and a full-time naval reservist with the rank of lieutenant.
About two months before his release, Joyce opted to take his pension as a lump sum, then valued by the navy at $859,980. He was advised he’d receive payment in eight to 12 weeks. On Aug. 1, approximately one month after his release, the navy advised that the correct lump sum was $726,904. In October, more than three months after Jost’s release, the department advised that the payment would be $703,180. It provided no reasons for the reductions.
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It wasn’t until Jan. 20, 2016, that Jost received his payment, more than nine months after he gave notice of his discharge and more than six months after the discharge itself.
Daniel Lebouthillier, a spokesperson for the Department of National Defence and the Canadian Armed Forces, wouldn’t comment on the litigation except to say the department was aware of it. In an email, however, he stated that as part of Canada’s new defence policy, the department was working on reinventing how it approached transitions.
“To deliver dedicated professional and personalized support to all Canadian Armed Forces members, including those in transition, the Canadian Armed Forces will re-establish a personnel administration branch of experts in military human resources management,” Lebouthillier wrote.
“A new Canadian Armed Forces transition group, commanded by a general officer, will be established. All military personnel will use the services of this group, where the professional staff will ensure that all pre-release and pension administration is completed, and benefits are in place, before the transition to post-military life.”
He also wrote the group would make sure retired members are aware of and enrol in career transition programs, such as vocational rehabilitation, individual career counselling, job search placement and financial literacy.
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