Auditor again flags pension fund for military reservists as ‘problematic’

OTTAWA — A pension fund for Canadian military reservists is once again being flagged by Canada’s auditor general as being “problematic.”

In a recent commentary on the federal government’s 2016-17 financial audits, the auditor’s office says it is unable to provide assurances the reserve force pension plan’s financial statements are free of significant error.

It’s a problem that has been ongoing for the last 10 years.

Following a recent look at the books, auditor general Michael Ferguson remains unable to draw conclusions about the accuracy and completeness of data used to estimate reported pension obligations of $610 million — a situation his office describes as “unacceptable.”

“National Defence needs to complete its ongoing efforts to resolve this matter,” the report states.

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“This situation leaves parliamentarians and plan members without assurance that the plan’s financial statements present credible information about the plan’s finances, which is unacceptable.”

The concerns were raised as part of a commentary on financial audits of 68 federal organizations conducted by the auditor’s office for the fiscal years that ended between December 2016 and August 2017. The commentary was published March 28.

Overall, Ferguson was satisfied with the credibility of all financial statements it examined except those of the reserve force pension plan. No audit opinion was issued “because of significant and persistent problems with data quality.”

The fund has been plagued with problems since it was first introduced in 2007. It has never been able to convince the auditor’s office that its finances reliably reflected the financial position of the plan and never received an audit opinion, resulting in a full performance audit in 2011. That examination found the pension fund was introduced without adequate planning, leading to major backlogs.

The Department of National Defence has since changed some of its record-keeping practices for reservists, but the auditor says those improvements have not resolved matters.

Meanwhile, it appears backlogs have also continued.

A proposed class-action lawsuit has been launched by a group of veterans discharged from the Canadian Armed Forces who allege excessive delays in their pension payments. The action proposes to include members of the reserve force pension plan.

A certification hearing is not expected until April 2019, according to a lawyer involved in the case.

The department says it is committed to ensuring that all regular and reserve force military members receive comparable benefits and pensions. But it remained silent Tuesday on why problems with the reservist pension fund have remained an ongoing issue.

“We welcome the auditor general’s input and are always open to ways to improve outcomes for our reservists,” said Byrne Furlong, press secretary to National Defence Minister Harjit Sajjan.

Teresa Wright, The Canadian Press