Call it “pension week” in Canada.Each day this week the national paper will publish a new installment on the country’s pension crisis. On Wednesday, hundreds of Nortel pensioners and supporters will rally on Parliament Hill. Ken Georgetti, Jack Layton, Gilles Duceppe, and Dave Coles will support the Nortel pensioners and call for action on pension security.
The pension crisis has the potential to be a game changer after three weeks of game control and opinion poll gains by the Conservatives since Parliament has reconvened.(Where are the columns and blogs now urging us into the streets in a quick election?)
Pension insecurity is a problem for millions of Canadians who lost their savings in the financial collapse, and tens of thousands with private pension plans are facing immediate disasters. Wednesday’s rally will highlight the 17,500 Nortel pensioners who are watching their former company being sold off to pay off creditors while they face a cut of up to 30% in their retirement income – because banks come before workers in bankruptcy proceedings.
Next week, my union goes to the table with the country’s largest forest company, AbitibiBowater, which, like Nortel, is under CCAA (Companies’ Creditors Arrangements Act) orders. There are 30,000 workers and pensioners in this company’s pension plans which at the end of 2008 were $1.3 billion in deficit. Without a government solution, these key labour negotiations and the fate of these pensioners will be like a fast moving truck hitting a large stone wall.
Air Canada’s pension plan involves another 8,000 people. In this case, the federal government has allowed the company to skip payments, hoping that financial market recovery will get this plan closer to solvency by 2011.
Overall, according to the pension and benefit plan administrator Mercer Ltd., Canadian pension plans were about 72% funded as of last September. That means that when companies fall victim to the recession, worker pensions can be cut by close to 30%. Many of these plans will be forced to cut benefits even without CCAA or bankruptcy if they fail to make special payments.
Harper’s performance on the pension crisis has been dismal, to say the least. One year ago he appointed MP Ted Menzies to investigate into private sector pensions in the federal jurisdiction, where pension laws are among the weakest. Federally regulated companies can simply wind up an insolvent pension plan without any obligation to pay their deficit.
Menzie’s report was due in June, but he has faded into obscurity with no report and not a hint of any action coming from his end. Federal – provincial finance ministers also talked pensions in May and set up an ad-hoc research project which will report out to a meeting December 17 in Whitehorse, Yukon. Needless to say, a pre Christmas announcement from the Yukon of a breakthrough to protect pensions is not something that the country will hold its breath for.
None of the parties have yet been able to focus and mobilize the pension issue, because of the difficulty of framing a popular solution to a multi-billion dollar, structural problem with Canadian social security. Fundamentally, our country has opted for a poverty level public OAP and Canada Pension Plan, and left the rest to the vagaries of mutual funds, RRSPs and private investments. That model will fail millions of people, but changing it will require vision and boldness not unlike Obama’s challenge of changing the health care system in the United States.
The Canadian Labour Congress has proposed a number of measures including a doubling of CPP/QPP. The CEP has called for a “National Pension and Investment Fund” which would see the government take over insolvent private plans. The Nortel Pensioners have a lot to say also on how to fix a broken system. The ingredients for a populist, grass roots political campaign are on the counter – its now over to the NDP and the Bloc to make politics.
A note on the Liberals: they have told pensioner groups that they will not support legislation that would give pension deficits super priority over other creditors when companies like Nortel are liquidated. This would negatively affect the “cost of capital” say the Liberals, echoing once again the sounds of Bay Street. Until the Liberals rethink these policies, they will remain part of the problem.