In this round of negotiations between CUPW and Canada Post the future of our pension plan is a major issue.
Canada Post is telling us that our pension plan is in bad shape. But this is not true. Here are the facts
- At the end of December 2015 the going concern evaluation of our pension plan showed it had a major surplus.
- Canada Post’s going concern pension evaluation showed that it had a $1.2 billion dollar surplus.
- Going concern is a pension plan assessment that looks at the plan’s funded status on the basis that the plan will continue to operate indefinitely.
This is good news!
Yes, the Canada Post Pension Plan has a solvency deficit, but….
Our pension plan has a solvency deficit of about $5.9 billion dollars. A solvency deficit becomes a major issue if the pension plan has to wind up and Canada Post has to buy annuities for all current and retired members.
But—when the Federal Government announced the mandate review of Canada Post, they explicitly stated that full or partial privatization of Canada Post is not in the cards. This means that the solvency deficit is really a theoretical deficit.
It is true that Canada Post has to make special payments into the pension plan to cover this deficit. But all the unions at Canada Post are calling for the Government to exempt Canada Post from making these payments.
In BC, the large pension plans for direct government workers—education workers, municipal workers, and college and university workers—do not have to do a solvency evaluation and do not have to make solvency payments. If it applies to these pension plans, why should it not apply to the Canada Post Pension Plan?
Instead of scaring us about the solvency deficit, why doesn’t Canada Post agree with its Unions and work for an exemption from these solvency payments?
Canada Post wants all of us to be in a defined contribution pension plan as of the date of the signing of the new Collective Agreement. This does absolutely nothing to address the solvency deficit.
Currently, we are all part of a secure defined benefit pension plan. Under this type of plan, our pension is based on our years of service, our age at retirement, and our earnings. It does not matter if the stock market is doing great or doing poorly—we still get the same pension. This makes our retirement secure.
A defined contribution pension plan is essentially a group RRSP and is totally dependent on the health of the stock market. If the market is doing poorly—your pension is reduced! Canada Post is saying that your pension until the date of the signing of the new Collective Agreement will be a defined benefit pension plan. All your new contributions after the signing of the Collective Agreement will be in the defined contribution pension plan.
This proposal does nothing to address Canada Post’s Pension solvency deficit.
It just makes us poorer at retirement.
This is a rollback that won’t help the pension plan. It won’t fix anything. It just gives us a less secure retirement.
Canada Post’s proposed rollback won’t help our defined benefit pension plan and will make our retirement harder.
In solidarity,
Heather Andrews
Secretary-treasurer
Vancouver local of CUPW