The dispute over pension rights at Carleton University heated up this week as the Canadian Union of Public Employees called on the Financial Services Commission of Ontario to investigate a controversial amendment to the pension plan that dates back 15 years.
The amendment, which permitted the elimination of a benefit guarantee feature for all service after July 1, 2003, has been a key issue in a strike by more than 850 administrative, technical and library staff that has entered its fourth week. On Monday, the union filed the formal legal complaint about the amendment with FSCO.
In a statement, the university said the regulator had long ago dealt with the union’s concerns. “In 2010, CUPE attempted to overturn recommendations from the pension committee by filing a similar complaint which was dismissed by FSCO,” the university’s statement noted. “Now, CUPE is attempting to go back even further to revisit decisions that are 15 years old. Carleton will respond to this complaint with FSCO directly. We are confident it has no merit.”
In the letter to the regulator, Simon Archer, a lawyer at Goldblatt Partners LLP and counsel to the union, wrote that there are several issues in the amendment and administration of the plan that aren’t in compliance with the province’s Pension Benefits Act.
“To our knowledge, the plan is the only pension plan in Ontario that is registered as a single-employer pension plan that is both a defined benefit plan and a defined contribution plan, that permits variable benefits to be paid from the plan’s fund and at benefit levels that are described as ‘minimum guaranteed benefits’ that may reduce to an amount below the ‘guaranteed’ amount determined at a member’s retirement date,” wrote Archer.
According to Kevin Skerrett, senior research officer for CUPE, there are six active hybrid pension plans in the Ontario university sector, all grandfathered from the early 1990s when the government amended the Income Tax Act. The hybrid plans include both a defined benefit and defined contribution component.
“I would have always understood that . . . the defined benefit minimum guarantee component would, of course, conform with all of the standards, laws and frameworks of a defined benefit pension plan, which includes, under the act, the idea that an accrued benefit can’t be reduced. And it certainly can’t be reduced once it is in pay to retirees,” he says.
According to Skerrett, three of the hybrid plans apply the minimum guarantee calculation at retirement and then reapply it every year. The other three plans — Carleton University, Queens University and York University — apply it just once, at retirement, he says.
“Those three plans that don’t do the annual minimum guarantee check, they established a special component of the plan that basically legally guarantees that the pensions can never be reduced. And in 2003, Carleton eliminated that feature. And that makes Carleton’s the only defined benefit plan, I believe, in Ontario and possibly in Canada, administering the defined benefit in a way that allows them to reduce the pension even in pay to the retirees . . ..”
He continues: “The confrontation that’s still underway at Carleton around their pension plan is, in some ways, a product of that history. But [there was] also another round of adverse plan changes that were implemented by the university in 2010, when they . . . increased the contribution rates paid by plan members in a way that was in violation of the CUPE collective agreement.”
In 2014, the parties reached a settlement that established that there would be no more changes to benefits or contribution rates, says Skerrett, noting the dispute essentially resurfaced at the next round of bargaining. “Basically, this big important dispute is still hanging over the pension plan and the university and specifically, this CUPE local, heading into this round of bargaining.” Earlier this week, the CBC reported that while the university has signalled its openness to a defined benefit minimum guarantee, it’s also seeking to remove language in the union contract that prevents increases to employee contribution rates to the pension plan.
Despite the complaint to FSCO this week, the parties moved to return to the bargaining table on Wednesday with the help of an external mediator.
“We are fully prepared to negotiate and settle this strike,” said CUPE Local 2424 president Jerrett Clark. “But we see the protections of pension rights in our collective agreement as more important than ever in light of these new revelations.”