Like this article? Chip in to keep stories likes these coming.
Municipal employees in the Town of Happy Valley-Goose Bay, Labrador have been locked out by their employees for almost three weeks in a fight that's become all too familiar in recent years.
"We've had more pension discussions within CUPE in the last two years than probably the previous ten," said CUPE National President Paul Moist, whose union represents the 43 workers locked out Happy Valley-Goose Bay.
"There is a climate out there, there's a lot of underemployed Canadians, our economy is not performing that well, the public sector has kind of got deficit hysteria and employers are trying to divide and conquer saying 'we'll take care of all of you that are here now, but we need a different pension plan for the folks that haven't been hired yet.'"
"That's a pretty difficult spot to put people in," Moist explained, "Most CUPE members, most union members, they don't want to be on a picket line but they are willing to stand up, and they are standing up right now in Happy Valley Goose Bay."
"In the last five years pensions have become a leading, if not, by far the leading issue at bargaining tables in the public sector and the private sector across this country," explained Canadian Labour Congress (CLC) Social and Economic Policy Director, Chris Rogers.
As Rogers explained, employers in both the public and private sectors have been pushing to eliminate what are called 'Defined Benefit' (DB) pension plans. Under these plans, retirees receive a set monthly income -- a defined benefit -- and the employer is largely responsible for the managing the pension fund from which those payments are drawn.
"The problem dates back to the economic recession of 2008-2009," Rogers explained, when plummeting stock markets and low interest rates majorly reduced the actuarial worth of some pension funds, leading to higher projected contribution requirements from employers.
"By and large employers are gunning for these DB plans," Rogers explains, "a whole variety of things are coming together to make these plans more costly and risky for employers. [...] Even in situations where the employer is profitable and the plan is in pretty good health, employers are just saying we don't want to offer this anymore. We want to get out of them, we want to freeze them and wind them off, or close them off to new hires."
Anticipating higher risks and the changing demographics of their workforce, a lot of employers are trying to wiggle their way out of DB plans by introducing two-tiered systems, where current workers keep their DB plans while younger workers receive what's called a 'Defined Contribution' (DC) pension plan.
In the downgraded DC plans, what a retiree can draw from their pension each month varies depending on how much they proportionately contributed to the pension plan and how this money was invested.
Solutions from the ballot box
As more employers switch to DC plans or eliminate pension options all together, the risk and responsibility of retirement savings is increasingly put onto workers.
"The majority of workers in Canada have no workplace pension plan and I don't think there's any prospect of employers providing plans to the majority of workers anytime soon," said Rogers.
The good news? There are other solutions to Canada's pension pains.
"Now that the employer offensive is really intense, trade unions have realized that the best way to improve retirement security for all Canadians, not just our members, but really for workers who have nothing, is to expand the Canadian Pension Plan (CPP)" Rogers explained.
Canada's retirement security is built on three pillars;
The Canadian Pension Plan, like the Quebec Pension Plan, is an earnings based pension plan that operates like privately run Defined Contribution plans, except that it is publically administered.
The third-pillar of Canada's retirement security plan was supposed to come from employer-run pension plans or individual savings plans like RRSPs. In the mid-1960s when this model was established, Rogers explained, employers and insurance companies pushed for limited public options, signalling their intent to support private savings models.
"Since then, instead of the private workplace pensions being offered by employers and voluntary individual savings, such as RRSP, the pillar has grown increasingly weak and feeble and inadequate for the majority of Canadians," Rogers explained, "It hasn't fulfilled its promise."
Given these circumstances, the CLC with the support from their affiliate unions are calling for a major expansions of public retirement security.
"Frankly there's no other solution to the impending retirement security crisis," said Rogers, "There's no other solution that's as simple and as elegant and far reaching and effective for the cost."
Like a DB plan, the CPP is funded through matched contributions from employers and workers and is then paid out at predictable rates. "It's perfectly portable," Rogers explained, "it doesn't matter where you go, how many times you change jobs, you are always saving into this one pension pot. And it pays a real pension benefit when you retire. You know exactly what you're going to get. It's predictable, it's secure, it's paid until death, and it's indexed against inflation so cost of living isn't going to erode it."
On top of that the massive scale of the public pension plan means that it is operated at a relatively low administrative costs and has access to investment options and safeguards that make it less susceptible to market fluctuations.
"It's weathered the storms of the last five years quite well," explained Rogers, "In the worst of all worlds, if the global economy implodes, there are triggers in the plan to return it to fiscal health. The problem is that the benefits is just too low."
In it's current form, the CPP is supposed to contribute about 25 per cent of a retiree's pre-retirement income -- an average of about $500 a month. The CLC thinks it would be possible to at least double that amount if CPP contributions were increased by three per cent during a seven year phase-in period.
"As we like to say, for the cost of really what can be measured in a cup of coffee and timbits per week, we could get to a 100 per cent increase in benefits," said Rogers.
The CLC started its pension campaign in 2009, at the height of the global recession. Now, in an election and with a new President, the CLC feels it has a strong mandate to continue the fight.
CUPE National President Paul Moist says that his union is happy to work with the CLC on the campagin and believes that the issue of pensions is already top of mind for most Canadians.
"We think the country needs a debate," said Moist, "Everybody talks about the looming pan-Canadian challenge of retirement insecurity. It would be much better to give people a system to save within during their working life."
"We think it is going to resonate as an election issue and we intend to make this a key issue in the coming election," said Rogers.
See more on the CLC's retirement security campaign here.
Ella Bedard is rabble.ca's labour intern. She has written about labour issues for Dominion.ca and the Halifax Media Co-op and is the co-producer of the radio documentary The Amelie: Canadian Refugee Policy and the Story of the 1987 Boat People.
Thank you for reading this story...
More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all. But media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our only supporters are people and organizations -- like you. This is why we need your help.
If everyone who visits rabble and likes it chipped in a couple of dollars per month, our future would be much more secure and we could do much more: like the things our readers tell us they want to see more of: more staff reporters and more work to complete the upgrade of our website.
We’re asking if you could make a donation, right now, to set rabble on solid footing in 2017.