Surprise payout from a lottery ticket? Not quite. Income went up because employee contributions to their pension plan went down.

That’s what happened this year when the Fund generated a surplus of $1.334 billion. The government took $667 million to pay down its liability (now a mere $153 million, slated to be paid off in 2003 at the latest); OPSEU surveyed its members to find out how they wanted to spend their money. Following the guidance of over 12,000 plan members who filled out surveys, the OPSEU Executive Board opted to give members a four per cent raise for at least two years (through lower contributions), extend the Factor 80 retirement plan, and make other improvements.

A free gift from the employer? Not even slightly. The reduced contributions and better pensions that kicked in Dec. 1 grew out of struggles that started over 30 years ago.

Pensions B.O. (Before OPSEU)

Once upon a time, Ontario government employees did not have a union. Most workers in the Ontario Public Service belonged to an association – the Civil Service Association of Ontario (CSAO).

Association members had no real bargaining rights. Pay rates and benefits were (basically) set by the employer, not through collective bargaining. Under the law, CSAO members could not strike, take part in politics (except to vote), or bargain anything to do with pensions.

Pension funds for OPS workers were the sole property of the government. The pension money was being used as part of the general revenue fund of the province.

Many workers signed on with the government for the first time after the Second World War. Time passed. Workers who were young in 1945 were not so young in 1970. As they got older, and inflation picked up steam, they started thinking about pensions. They started asking questions.

People were getting fed up. What it came down to was people waking up to the fact that there was a whole pool of money over there and people were retiring.

Don’t call me servant!

The members of CSAO, and later, OPSEU, began to realize that their pension dollars were subsidizing the government - not securing their old age.

"Getting control" meant getting control of more than just pensions. It meant full bargaining rights for public service workers. It meant political rights as citizens. And it meant a campaign that lasted a quarter of a century.

During that time, Ontario premiers came and went. OPSEU presidents came and went. It was a quarter-century of resolutions, lobbying, and rallies (including one that filled Copps Coliseum in Hamilton). Finally, on Dec. 14, 1993, the New Democratic Party government passed Bill 117, a full-scale re-write of the Crown Employees Collective Bargaining Act (CECBA). Among the changes was the right to bargain pensions.

Both Liberals and Tories opposed the move; they wanted to keep public service pensions cheap. "It’s not in the public interest for the government to permit that pensions be negotiable," Liberal MPP Elinor Caplan told the legislature.

Joint control: the OPSEU Pension Trust

But bargaining pensions is in the interest of OPSEU members. Changes to CECBA opened the door to negotiations on joint control in 1994.

"We knew joint control would pay off, but we also knew we weren’t going to get it for free," says Len Hupet, OPSEU First Vice-President/Treasurer. In exchange for setting up the OPSEU Pension Trust, the cash-strapped Rae government got a contribution holiday worth $1 billion over three years.

The Trust began operation on Jan. 1, 1995, controlled by a board of five employer and five union representatives.

Since then, growth of the Trust has averaged 16.4 per cent per year, far higher than the rate needed to cover the Trust’s liabilities. As a result, Trust assets are now over $9 billion.

"We are now one of the top ten pension plans in Canada as far as rate of return," says Hupet. "OPSEU members have an equal say in how that money is invested, and how it is spent. That’s why we are now able to reduce contribution rates for plan members and improve pensions at the same time."

The big payoff

Under the agreement set up to govern the OPT, any surplus is divided evenly between the employer (the Ontario government) and the union.