In its latest round of negotiations with Canada Post, the Union of Postal Communications Employees, a division of the Public Service Alliance of Canada, is fighting for defined benefit pensions for all of its members.

“We believe that [defined contribution] does very little for the plan itself but has significant impact on our members’ retirement security,” says François Paradis, national president of UPCE, which represents engineers, human resources staff, call centre representatives and a variety of other employees at Canada Post. “. . . Our position is that instead of defined contribution, we should be permanently exempt from solvency funding.”

Read: Labour deal lets Canada Post workers keep DB plan for at least two more years

Employees who joined the organization after May 2014 are enrolled in a defined contribution plan, says Paradis. They can contribute from one per cent to four per cent of their salaries, to which Canada Post will contribute a match at between 75 and 125 per cent, depending on employees’ age and years of continuous service, according to a corporate newsletter. Between 100 and 200 workers represented by PSAC are on the defined contribution plan.

While the union conceded to having new employees join the defined contribution plan during its last round of bargaining in 2014, Paradis says it’s because the union was misled. “[As] part of those negotiations, we were told essentially by the corporation in bargaining that they would never get a special deal from the government of Canada.

“And shortly after stating that, they got temporary solvency relief from the government of Canada, which basically absolves them of making any form of solvency payments until January 2018. . . . And during that round of negotiations, our members were also told that if they didn’t accept this deal, they would probably get a deal of lesser value.”

Read: Canada Post labour deal boosts dental, short term disability benefits

In August 2016, a labour arbitrator ruled that new Canada Post employees represented by the Canadian Postmasters and Assistants Association would join a defined contribution plan. Nevertheless, Paradis is undaunted.

“What happened through CPAA is, I think, unfortunate but it doesn’t impact our strategy,” he says. “Our positions continues to be that we don’t see DC as the solution.”

According to a spokesperson from Canada Post, the organization is “not commenting on specifics related to negotiations other than we are committed to reaching a negotiated settlement that is fair to our employees while reflecting the challenges we face as a corporation.”

Read: Arbitrator picks DC plan for Canada Post rural workers

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com
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Chas:

Paradis“. . . Our position is that instead of defined contribution, we should be permanently exempt from solvency funding.”

This is akin to saying “We insist on being able to take time off for skydiving lessons, but we should permanently exempt from the parachute requirement.”

The objective of having all members covered by DBs is the correct one. A little coaching in the fundamentals of pension funding should bring him around to how to align the objective with the means to its achievement.

Monday, March 06 at 11:10 am | Reply

Sylvie Leduc:

Whether it is Canada Post or any other crown corporations they will eventually all push for the maintenance of DB plans for a number of financial reasons and to maintain some sort of equality with the public sector employees’ plans of all three levels of governments.

It is mandatory for the Trudeau government to come up with a National Policy on retirement. It can then be personalised at provincial and municipal levels for the right socio-demographic-economic reasons as opposed to a whim and an unjustified desire.

Until then we will continue to have these isolated discussions with minimal results. The income and intergenerational divides that we are witnessing will also be further maintained.

Accompanying this national policy, is the introduction of data standards in the field and cutting edge IS/IT tools to support the financial and administrative management of these plans. Is the task humongous? Absolutely… We need to start somewhere.

I have attempted to reach the Trudeau government via the front door of three ministries to create a PPP on the IS/IT portion of my work; sadly in vain.

Monday, March 06 at 12:42 pm | Reply

Joe Nunes:

You can have the position that DB is better than DC, and I would agree. But you also need to address the cost of providing DB benefits and articulate how salary and non-pension benefits can be adjusted downward to compensate for the ever increasing costs of DB promises. Whether you are exempt from solvency or not doesn’t mean those costs aren’t real – you are just changing who pays and when.

No one saw in advance interest rates falling as low as they did in 2007 and no one saw in advance the last decade of interest rate manipulation by our governments. The assumed low cost of these generous pensions made in the 1980s is about half of what it actually costs today. So where does that money come from if we assume tax payers do not have unlimited funds to contribute?

Monday, March 06 at 8:48 pm | Reply

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