If the defined contribution pension plan currently on the negotiating table for new Canada Post employees who are members of the Canadian Union of Postal Workers is the same as the one brought in for members of the Association of Postal Officials of Canada in 2015, it would have matching employer contributions up to a maximum of four per cent.
The proposal to close the defined benefit pension to new employees and switch to a defined contribution one is a key issue in the negotiations leading up to this week’s lockout notice. If the company is successful in the negotiations, the defined benefit plan, which had 52,779 active members in 2014 according to Canada Post financial records, would still remain open for all employees that are currently in it.
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Effective Jan. 1, 2010, the organization closed its defined benefit pension plan to non-unionized employees and added the defined contribution component. 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. The union’s national president was unable to share the details of that plan in time for the deadline for this story.
The company tried but failed to introduce a defined contribution plan for CUPW members amid a labour dispute in 2011. The union is the only bargaining unit that doesn’t have a defined contribution plan in place for new employees, says Guy Dubois, national president of the Association of Postal Officials of Canada. The union, whose members include supervisory employees at Canada Post, has been part of the defined contribution component since of March 1, 2015. Its defined benefit plan, which is still open to those already enrolled in it, has a nine per cent contribution from each of employees and the employer.
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Within the plan for new employees who are also members of that union, employees can contribute between zero and four per cent of their salary, although everyone enrols in it automatically at a two per cent contribution. Canada Post will then contribute a base amount of two per cent of each employee’s salary, matching up to four per cent at a level that depends on service: 75 per cent if the member’s age plus service is less than 35; 100 per cent if the member’s age plus service is 35 or more but less than 45; and 125 per cent if the member’s age plus service is 45 or more.
At first, the plan didn’t include automatic enrolment, says Dubois. “We were not comfortable with that because sometimes when people are young, they don’t think about that. So we asked the corporation: Can you put something [in as a] default?”
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The main concern, says Dubois, about switching to a defined contribution plan is that employees don’t really know how much they’ll end up with at retirement anymore. “You might have to put more on the side on the DC plan to have a decent pension. Now, the employee is riding the bus. But they are kind of a hostage to the market.”
As it represents 3,500 Canada Post employees, the union’s goal is for the organization to be in a better financial situation so that new employees may have a defined benefit plan in the future, says Dubois. “We believe that DB will help you get the best candidate to work at Canada Post. If you want to be No. 1 in the market . . . give me something in return. So ask me more, make me accountable for my action, but if you give me a DB plan, you’re going to attract more people with higher experience.”
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Dubois says Judy Foote, the federal minister of public services and procurement, has told him it’s unlikely there will be a return to a situation where every employee at Canada Post has a defined benefit pension. But she did note that the task force appointed to conduct an independent review in May 2016 is focusing on getting Canada Post back on track.
The union’s experience when it moved to a defined contribution plan for new members was quite different from the current labour dispute because one of the stipulations in its collective agreement is that it can’t go on strike. “Our relationship with the employer is more base interest. We try to resolve it, we try to influence, we don’t have the right to strike,” says Dubois.
“Don’t get me wrong. I think the union has a role to play. Unions are very important to have that balance between employer and employee, but if I look at all the volume that we’re losing right now because there’s a potential of strike, quite frankly, I think it’s sad.
“The majority of the people I know, not in our bargaining unit but in CUPW . . . care about the business, they care about the customer and they don’t want to strike.”
Both Canada Post and CUPW didn’t respond to requests to confirm the details of the proposed defined contribution component at issue in the current talks.
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