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Canada Post labour dispute: A look at the company’s existing DC plan for some workers

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Joe Nunes:

Two truths:

1. It is likely that the DC plan is less generous than the DB plan and workers will need to save more on their own or postpone retirement to a later date than past generations

2. Truth #1 is no different than it has been in the private sector over the last three decades and public service unions are going to have to accept that generous DB plans for public servants are losing support from taxpayers

Friday, July 08 at 1:01 pm | Reply

Corey Vermey:

Remember the first conclusion of the study by Robert L. Brown and Craig McInnes:
1. The perceived advantages to closing DB pension plans in the private sector do not translate directly into the public sector. While the shareholders of private corporations
are primarily focused on profits, the shareholders of public corporations have other needs to consider.
While private corporations are able to off-load costs without being concerned about who has to pick them up, public sector employers who off-load costs in many cases are off-loading costs that have to be picked up in some other form by their shareholders, i.e., governments and
ultimately taxpayers. Canadians unable to save enough directly or through workplace pensions while they are working become a burden in retirement for taxpayers.

5. If the motivation for a conversion to DC is to reduce costs, then it should be noted that shifting to DC actually increases the cost of delivering a comparable pension benefit.
6. If the motivation for a conversion to DC is to reduce the government’s exposure to the financial risks associated with sponsorship of the pension plan, then it should be noted that other plan design options are available for reducing or transferring risk that do not require sacrificing the plan’s investment efficiency. Many of Canada’s large public sector plans have already employed features such as joint sponsorship and/or contingency of non-core benefits in order to share and reduce risk. From this starting point, governments cannot benefit a second time by shifting again risks that have already been transferred to members. It is not clear that many Canadians
appreciate this evolution.

Friday, July 08 at 1:56 pm

Chas:

Joe Nunes: “Truth #1 is no different than it has been in the private sector over the last three decades and public service unions are going to have to accept that generous DB plans for public servants are losing support from taxpayers”

Not exactly truth, and not representative of the views of this private sector taxpayer, but perhaps a political statement…. to which Nunes is certainly entitled.

I support funded DB plans for public sector employees. I also support high plan governance performance, which is so obviously lacking in C. Post’s pension sponsor and valuation actuary.

The solvency deficit is tantamount to a monumental cover-up, in that gov’t’s failure to legislate sensible CP revenue preservation measures ten years ago, and its willingness to artificially inflate of CP’s bottom line by hiding the obligation, leaves us in the present quandary.

A lot of people have been paid good money to keep ALL members whole: new employees, active members, deferred members and members with pensions in pay. They have failed miserably. They should have the decency to refund their fees, or have their salaries trimmed.

This union is right to crystallize the pension issue now and to stay on it like a bone.

Wednesday, August 10 at 11:26 am | Reply

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