A freeze on postal services starting July 2 is nearing reality as Canada Post and the Canadian Union of Postal Workers fail to agree on pension changes at the negotiating table.

Canada Post is proposing to replace CUPW members’ defined benefit pension plan with a defined contribution plan, says Mike Palecek, national president of the union that represents more than 51,000 workers in Canada. “There’s no way we’re accepting [pension changes],” he says.

“The pension is incredibly important for us, for our members who work for an entire lifetime at our public post office…with the promise that they’ll have a decent pension and be able to retire with dignity.”

The postal service says it will not comment on the specific changes it’s proposing for the union members’ pension plan, but Jon Hamilton, general manager of Canada Post’s communications strategy, says pensions are part of the negotiations.

“Our employees are well aware that there are challenges that the pension is facing…” says Hamilton. “…With the low interest rate environment plus the sheer size of the plan and the solvency deficit that currently exists… people living longer lives…certainly puts pressure on every single pension plan including Canada Post.”

Read: How Air Canada’s pension took off as Canada Post’s plan sank into deficit

The organization closed its defined benefit pension to non-unionized employees and added a defined contribution component, effective Jan. 1, 2010. All defined benefit pension plan members on Dec. 31, 2009, remained in the plan. Negotiations led to the introduction of a defined contribution component for new unionized employees represented by the Public Service Alliance of Canada as of June 1, 2014, and the Association of Postal Officials of Canada as of March 1, 2015.

Canada Post dropped a similar proposal to introduce a defined contribution plan for new employees who were members of the CUPW amid a labour dispute in 2011, as Benefits Canada outlined in its April 2016 cover story.

“This is a line in the sand for us…we’re not accepting cuts from this employer when it’s making fantastic profits as a result of our work,” says Palecek. With negotiations set to conclude at the end of June, Palecek adds that “every indication is that Canada Post is preparing to lock us out in early July.”

Read: To plug pension hole, Canada Post needs contractors

But, according to Hamilton, the company is doing everything it can to avoid a work disruption. “We’ve been negotiating since late last year. We have not made the progress that we had hoped we would make at this point, but there’s still time and we’re committed to using every minute, every hour to get an agreement.”

In order to come to that, Palecek says “Canada Post needs to come to the bargaining table with some serious proposals that we can actually accept.”

Last week, the union launched the National Organization of Retired Postal Workers, which is made up of 24,000 retired postal workers who joined the fight against proposed changes to the pension plan.

Read: Canada Post to receive pension funding relief

Copyright © 2021 Transcontinental Media G.P. Originally published on benefitscanada.com

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The problem is that CP is not “making fantastic profits” as the union asserts, but it’s not the workers’ fault.

What would CP revenues be if the Telus’ and the Bells of the world had not been allowed to impose digital billing on its millions of customers, then siphon off the residual as a paper billing charge.

Telus and Bell treat these “green” revenues as profit centres, at the rate of approximately $1 for every paper bill mailed. Therefore, at the end of the day, CP loses the majority of the revenue and the bill issuers margin up-on mail services, in effect-on the paper ones. This is CP competition by any other name, which to my knowledge, is outlawed in Canada.

The government’s ridiculous home delivery election promise has also been an indirect contributor to CP’s financial plight. The complainers that it is placating are no doubt the very people who no longer use Canada Post for their outbound messaging, but in typical Canadian fashion, expect a free ride.

Back to the pension question….every digital bill issuer should be paying a paper mail substitution charge. Pension deficit solved, and no strike.

Monday, June 27 at 1:51 pm | Reply

Bilbo Baggins:

Why should a postal worker have a rich pension, or any pension at all? Let alone the wages they receive.

They should be making similar to wal-mart or 7-11 employees. Since their skills and responsibilities are similar.

Tuesday, June 28 at 12:04 am | Reply

dean baxendale:

These are difficult times for workers and businesses alike. In Ontario we have seen a tremendous decline in solid and well paying manufacturing jobs, R and D expenditures are down and capital investment in new equipment and technology has also been in decline.

With that as a backdrop the employees at Canada Post are fighting to maintain a defined benefit plan that may not be sustainable especially given the low interest environment we find ourselves in and will be in for the foreseeable future. Whether or not the 6 billion pension shortfall can be arrested or not the actuarial science behind the projection needs to be verified and if it is accurate then it is incumbent on management and employees to work together to bring it back in line. This will take bold steps in the investment side just as CPPIB has made significant strides to arrest its deficit through a very strong diversification plan that started over a decade ago. They have some of the best and brightest driving higher and higher returns for the Public sector workers.

As far as defined contribution verses Defined Benefits we have seen numerous company’s including Nortel here is Canada go from a 100 cents on a dollar to less than 25 cents due to the bankruptcy of the company. In the US municipalities (especially in California) have declared bankruptcy in order to address the Defined Benefits plans that it promised workers but could ill afford. These are realities of today’s worlds and until CUPW recognizes that these types of issues are now the backdrop for the future returns on the pensions then this negotiation will go nowhere on this subject and conversely if CP wants to address this issue fairly then proposing changes in partnership and sharing any upside if funds are better deployed and deliver higher ROI’s then that would be a win win.

Canada Post is funded by businesses not government and the workers must realize that just because it is does’t mean it has to stay any which way. While a crown corporation the management should be encouraged to make it profitable at rate similar to the private sector which means a target of $300 + millions should try to be targeted. This will allow both the workers and management prosper and ensure the key stakeholders (Businesses that use Canada Post) are well serviced and their customers the recipients of mail, parcels and direct mail and flyers are truly well served.

Friday, August 26 at 1:03 pm | Reply

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