A class-action lawsuit by former teachers and government employees against the Alberta government has been given clearance to proceed by a judge, but not in its entirety.

The Alberta Society for Pension Reform claims the province shortchanged thousands of Albertans by more than $3 billion on their pensions for decades.

Lawyer Virginia May argued in a Calgary courtroom Tuesday that the province used part of its employees' pension fund to pay for the Canada Pension Plan when it was introduced in 1966. She said the move has since shortchanged pensioners by billions of dollars.

But government lawyers argued any shortfall was due to government legislation and is therefore protected from legal action.

The Court of Queen's Bench Justice J.D. Rooke agreed, but added the province could be sued if it had mismanaged that legislation. That means part of the class-action suit will go forward, and part of it won't.

Speaking outside court, May said she disagreed with the ruling.

"Our view is that the whole of the claim fits into the right box, which is the court should go ahead to trial and let a trial judge determine what this is about."

Ken Smith, head of a group of former employees, said the government should be ashamed by how it is treating its former employees.

"These people paid into pension plans for 30 years or more expecting a decent retirement, and today they are as much as receiving welfare. This is the 'Alberta Advantage?'"

Lawyers for the government declined to comment.