Title: Pensions at Work Lecture Series: Current Pension Issues from a Union Perspective
1Pensions 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
2Overview
- CAW agenda for pensions
- Current issues with employer plans
- CAW Union in Politics Committee
- Pensions will be our first campaign
3CAW-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
4Three Tiers Canadas balanced approach to
retirement funding
Savings
Workplace Pensions (RPPs)
5Why 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
6Crucial 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
7OAS reduced poverty among seniors especially
women
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9Ripleys 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
10CPP/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
11And today . . .
- CPP Investment Board proudly reports CPP good
for 75 years - QPP reports stellar investment returns
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14The 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
15Old Age Security Enacted in 1927
16J.S. Woodsworth
17Grey Power Protesting de-indexation of OAS
18U.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
19Woody 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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21CAW 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
22Issues 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
23The disappearing employer pension plan . . .
24Want a pension? Get a union!
25DB Plans in Crisis?
- Many DB plans face funding deficits
- 2 major reasons
- stock-market meltdown (smaller assets)
- lower interest rates (bigger liabilities)
- contribution holidays
26How 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
27Employers 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 . . .
28vz
29In 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
30Labours 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
31ONDP Pension Hearings
32Welland council supports improving PBGF
33CAW 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