Thank you, Mr. Chair. There is really no need to apologize.
Mr. Chair, thank you for the opportunity to meet with your committee today to discuss chapter 3 of the Auditor General's spring 2011 report about the reserve force pension plan at National Defence.
With me today is Tom Wileman, principal.
Reservists play an important role in the Canadian Forces. While most serve part time, some volunteer for full-time service and have been deployed to overseas operations.
In November 2008, we audited the financial statements of the reserve force pension plan. For the 2007-08 and 2008-09 fiscal years, the audit resulted in a denial of opinion, because there was not sufficient information to determine the reliability of the financial statements. It is rare that we are unable to express any opinion on whether financial statements fairly reflect the financial position of a federal program. Therefore, we decided to conduct a performance audit to find out why this occurred.
Establishing a new federal pension plan is a rare and specialized undertaking. National Defence designed the plan to include all reservists, subject to eligibility requirements, and to allow pension buybacks for an unlimited period of past service. As of March 2010, approximately 21,000 contributors were in the plan.
As outlined in exhibit 3.1 of our chapter, the establishment of a pension plan for reservists has a long history. The need for a pension can be traced to the late 1980s when National Defence determined that such a plan could help with the recruitment and retention of reservists. In September 1999 Parliament authorized the establishment of a pension plan for the reserve force. In March 2007 the reserve force pension plan came into force. We examined the approach the department had followed to plan and implement a separate pension plan for reservists.
We found that National Defence did not have adequate planning in place. No senior official was made responsible for coordinating both the policy development and the delivery of the reserve force pension plan.
As a result, pension services were prone to delays and errors in the first three years of operations.
Consequently, there is a serious backlog in processing pension buybacks. National Defence statistics show that 4% of 9,213 buybacks requested by March 31, 2010, have been processed. Many reservists could wait seven years or more from the 2007 start date to know what pension benefit to expect and what it will cost them. There will still be a backlog in March 2012.
We recommended that National Defence adopt comprehensive measures to improve the management of the reserve force pension plan. The work on this audit was completed in November 2010, and we have not reviewed actions taken by the department since then.
The committee may wish to ask National Defence about its progress in improving pension services for reservists. The committee may also wish to ask the department what the current backlog is, when they plan to eliminate the backlog, and when they will be in a position to provide a set of reserve force pension plan financial statements that can be audited.
Mr. Chairman, this concludes our opening statement. We would be pleased to answer any questions that the committee may have.
Thank you.