Monday, June 13, 2011

Hands Off Canadian Pensions

Government had no right to seize pension surplus, must return it

Unbeknownst to many Canadians, there's a pivotally-important question at the centre of the ongoing -- and escalating -- postal workers' strike.

That question is: to whom do the pensions of Canadians belong? To themselves? Or to someone else?

In 1999, the Liberal government of Jean Chretien had an answer that should outrage all Canadians. They essentially decided that the pensions of public service employees belonged to them, to do with as they please.

They took it upon themselves to seize a $6 billion surplus in pension funds belonging to public service employees, the RCMP and the military and use it to eliminate the federal deficit.

"It was a money grab," fumed Public Service Assiance of Canada Executive Vice President Patty Ducharme. "The federal government has a responsibility to its employees, to the plan members; but they just took that money out of the plan ... and stole it."

"Stole" is a strong word. But it's bloody well close.

As the faceoff between Canada Post and the Canadian Union of Postal Workers draws on, it pays to remember that one of the issues at play in the strike is the state of the CUPW pension fund. The union wants to use funds from a profit-sharing program to restore solvency to the fund.

But they shouldn't have to. The funds snatched from the pension fund should have been returned long ago. They should have been returned, at the latest, five years ago.

It's largely Jean Chretien and Paul Martin who are responsible for this scandalous outrage. (It's one of many underhanded means they used to balance the deficit, including cutting transfers to provinces, raiding EI premiums, and cutting funding to health care and education.) But they don't carry it alone.

It's an absolute outrage that the Conservative Party has bothered fighting this at all. Prime Minister Stephen Harper and Finance Minister Jim Flaherty should have smiled and obligingly introduced a program to restore the pilfered pension funds in 2006. They didn't, and the government is fighting it still.

The figure under discussion? $30 billion. That's $30 billion being withheld from hardworking public servants, including the woman who brings you your mail (and in this author's neighbourhood, doesn't at all mind when a well-behaved dog accompanies her on her rounds), the RCMP officer you call when you need help (even if he occasionally writes you a traffic ticket), the military personell who risk their lives for us, and countless others.

It's absolutely mind-boggling that the Ontario Superior Court of Justice could decree that public service unions are not entitled to those surplus funds, and sign of a deep rot in that institution.

It's a simple idea: in Canada, our pension funds belong to us. It should be not a whit different for public employees. If their pension managers do such a splendid job that they have a $30 billion surplus, that surplus belongs to the fund, not to the government.

This doesn't mean CUPW is right about everything in this strike. But they are right about this.

Fair is fair. And it's beyond the time for the government of Canada to do the right thing, and restore that $30 billion surplus to these pension funds.

1 comment:

  1. I understand what you're trying to say, but there is one thing that you're missing - taxpayers are on the hook for Public Service pensions regardless of if the fund has a surplus or a deficit. Now, this fact would be a concern if the country in question were Greece with a CCC rating, but in AAA Canada, there shouldn't be much of a concern.

    The fact is though that $6 Billion taken (however it was done) 10 years ago does not necessarily equate to a $30 Billion surplus today - I don't follow the math. What happens with a defined benefit plan, such as this one, is that an actuary comes in on a regular basis, and estimates how much money should be in the fund now to satisfy the future obligations of the plan. If the balance in the fund is low, then the employer is required to work to make up that shortfall. If the balance is high, then the employer is allowed to forego their contributions until such a time as the surplus is depleted to balance.

    This is why it wasn't illegal for Chretien to take and use that money, and this is why I agree that any shortfalls should be covered, but why the real number to return is nowhere close to $30 Billion.


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