Pensions at Work Lecture Series: Current Pension Issues from a Union Perspective

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Pensions at Work Lecture Series Current
Pension Issues from a Union Perspective

• June 2005 Toronto, Ontario
• Presented by
• Jo-Ann Hannah
• National Representative with Canadian Auto
  Workers Research Department

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Overview

• CAW agenda for pensions
• Current issues with employer plans
• CAW Union in Politics Committee
• Pensions will be our first campaign

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CAW-Canada Agenda for Pensions

• Pensions are a shared responsibility
• government, employers and individuals
• Retirees should maintain pre-retirement standard
  of living
• Benefit level 70 - 80 earnings
• Inflation protection
• Workers should not bear risk of market

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Three Tiers Canadas balanced approach to
retirement funding
Savings
Workplace Pensions (RPPs)
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Why public pensions are important to Canadians

• Crucial source of income
• Have reduced poverty among seniors particularly
  women
• Secure funding despite fears in 1995
• Benefits allow for life events
• Cost effective low administration fees
• CPP Fund investments

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Crucial Source of Income

• Two-thirds of all seniors receive total
  retirement income of 25,000 or less
• For those seniors, public pensions account for
  75 of all their income

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OAS reduced poverty among seniors especially
women
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Ripleys PensionBelieve-It-Or-Not

• The federal and provincial governments spend 12
  billion per year subsidizing RRSPs
• 2/3 of the subsidy (8 b) is received by the
  richest 10 of the population

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CPP/QPP securely funded

• In 1995, Canadians told the aging population was
  a ticking time bomb
• Paul Martins Solutions
• Delay retirement, cut benefits
• Most cuts hurt women
• Canadians fought back
• Paul Martin backed down
• minor cuts and modest contribution increase

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And today . . .

• CPP Investment Board proudly reports CPP good
  for 75 years
• QPP reports stellar investment returns

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The fight for decent pensions

• 1927 Old Age Security
• Excludes Aboriginal people and immigrants until
  1957
• 1965 - CPP/QPP
• 1966 - Guaranteed Income Supplement (GIS)
• 1977 - OAS reduced for immigrants
• 1983 - Parliamentary Task Force on Pension Reform
• 1985 Tories fail to de-index OAS
• 1995 Liberals back down on proposed cuts
• No income-tested Seniors Benefit, modest cuts
  to CPP
• Increase contributions for CPP Fund

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Old Age Security Enacted in 1927
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J.S. Woodsworth
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Grey Power Protesting de-indexation of OAS
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U.S. Social Security under attack

• President Bush announced a crisis in U.S.
  Social Security
• Solution is partial privatization
• U.S. Social Security Trust Fund reports if
  nothing is done, there could be a shortfall in 38
  years

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Woody Allen

• The universe is everything, and if its
  expanding, someday it will break apart and that
  will be the end of everything.
• from Annie Hall, 1977

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CAW proposals for public pensions

• Expand CPP (increase benefit to 30 of income)
• Raise GIS to eliminate senior poverty
• Raise OAS clawback
• Better access to public pensions for
• new Canadians
• CPP caregiver provisions
• Preserve retirement age at 65

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Issues with workplace pensions

• Employers want out of defined benefit pension
  plans
• Employers want out of any kind of pension plan
• Funding pension shortfalls in a bankruptcy

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The disappearing employer pension plan . . .
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Want a pension? Get a union!
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DB Plans in Crisis?

• Many DB plans face funding deficits
• 2 major reasons
• stock-market meltdown (smaller assets)
• lower interest rates (bigger liabilities)
• contribution holidays

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How widespread is the problem? Estimates

• Funds dropped from 115 to 85 (TSX)
• Federal regulator
• 53 of plans in shortfall
• most in 90 99 funded status
• Canadian Chartered Accountants
• 60 of plans in shortfall

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Employers reactions

• Air Canada cut, cut, cut . . .
• Actuarial reports on a crisis in unfunded
  liabilities
• Mercers If the horse is dead, dismount
• Others Not dead but need cuts
• Unions become skeptical
• Always a crisis and solution is always
  privatization and/or . . .

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vz
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In Most Cases Not a time to Panic

• DB deficits will be gradually worked off
• gradual stock market recovery
• gradual rise in interest rates
• increased employer contributions
• Problem is with bankrupt companies

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Labours legislative agenda on pension security

• Mandatory funding on a wind up
• Pension contributions form a deemed trust in a
  bankruptcy (BIA)
• PBGF Improve benefits and expand coverage
• Review contribution holidays where solvency at
  issue

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ONDP Pension Hearings
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Welland council supports improving PBGF
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CAW Union in Politics Committee

• Pensions are our first campaign
• Guidelines
• Strengthen ALL aspects of the system
• Involve ALL workers in the fight for pensions
• organized/unorganized
• high-wage/low wage