As contract negotiations between the City of Saskatoon and its transit workers heat up, the parties are in disagreement about the nature of the central issue, the defined benefit pension plan.

The Amalgamated Transit Union Local 615, which represents the transit workers, says the city is proposing a move from a defined benefit pension to a target benefit plan. “The plan is registered as a defined benefit plan, but the language . . . converts it to a defined benefit plan with target benefit, hybrid-type rules in place. Essentially, it’s a defined benefit without a guarantee,” says Jim Yakubowski, president of Local 615.

The City of Saskatoon says that’s not the case. “It is not a targeted benefit plan,” said Catherine Gryba, general manager of corporate performance at the city, in a news release last week. “The city is not able to change the current defined benefit plan into a targeted benefit plan under the legislation.”

In a post about the labour dispute on its website, the city said the proposal addresses the possibility of a shortfall. “The pension deal is an agreement in principle that simply lays out the rules for the city and the unions/associations to address any future shortfalls in the pension plan — if there are any future shortfalls,” the website stated. The city declined to comment further.

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Two years ago, an independent pension expert on the pension’s board of trustees reviewed the financial health and sustainability of the plan and found it had a large deficit, according to the city. In light of the deficit, it worked with eight other unions and associations to develop a plan to secure the plan.

“The city needed to take action to protect the future of our pension plan and protect the financial risk our taxpayers were exposed to. . . . Eight of the city’s unions and associations understood and did not disagree on the state of the plan and, together with the city, took the necessary action to address this large deficit,” the city said on the website.

The changes included having employees pay a higher percentage of their earnings in the future and capping the employer’s contribution at nine per cent, says Yakubowski, who suggests the dispute resolution mechanism that defines what will happen in the event there isn’t enough money in the plan means the city is no longer legally liable with all responsibility shifted onto the members.

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“The way the agreement reads, that eight out of the nine unions and associations have signed, that if there isn’t enough money in there, the city would be willing to put in an additional half per cent to go up to 9.5 per cent contribution, but in the event that still isn’t enough, they’d revert back to nine per cent and any future service benefits would have to be adjusted under that nine per cent cap,” he says.

On Sunday, a majority of the transit union membership turned down an opportunity to vote on the city’s final offer, but Gryba said in a statement the city is willing to go back to the bargaining table.

Despite the concerns, Yakubowski says the union could agree to the benefit changes and contribution rate increases that the other unions and associations have agreed to. “But there’s one important aspect that we’re not willing to accept, and that’s the capping of rates and the dispute resolution mechanism,” he says.

“What we’ve proposed for language in place of those two items is that, if we agree to sit down in the future when changes are necessary, we will bargain those changes just like we have since 1964. We’re really fighting to maintain what we’ve had all along.”

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Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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