Unions tell finance ministers of social, economic risks of failing to support retirees
Companies hiding behind bankruptcy courts to reduce pension benefits.
On the eve of a meeting of federal, provincial and territorial finance ministers' that was held in December in Whitehorse, two groups sent a letter urging them to fix the pension system that is allowing companies that go bankrupt or that are sold to discontinue benefits to retirees.
The letter, signed by Dave Coles, president of the Communications, Energy and Paperworkers Union of Canada (CEC), and Don Sproule, national chair of the Nortel Retirees and former employees Protection Canada (NRPC) pointing out the social and economic risks of failing to provide support for seniors while companies hide behind the protection of bankruptcy courts.
"As a result, tens of thousands of pensioners are facing drastic pension benefit reductions. Retirees are particularly vulnerable people as they cannot replace their benefits by re-entering the workforce or further reducing their living costs. Most of them are already living on a tight budget, many are in ill-health and these cuts will drive them into poverty and despair."
The letter expresses concern that pension funds be financed at a solvency level and that the funds should come from the assets of bankrupt companies, not the taxpayer. It further examines how Canada has outdated bankruptcy laws that can sometimes be manipulated by bondholders to trigger failure in order to collect insurance and other payments. As well, they are uncomfortable with the thought of pensioners having to suddenly manage their own pensions in a difficult market.
Before the same meeting, the Professional Institute of the Public Service of Canada (PIPSC) issued a press release stating how they were "appalled" with the C. D. Howe Institute's Pension Paper released in time for the meeting. Fearful of the influence of right wing commentators, PIPSC pointed out how public sector pensions are actually "deferred salary" where members contribute between 8.4 and 10.15 per cent of their annual salary.
David Gray, CGA and vice-president of PIPSC, wrote: "The data presented includes total debts for the public service pensions but only includes the amounts paid in from 2000 forward. It fails to include the $30B paid in by public service employees, or the $62B set aside by the employer as its contribution. Finally it fails to mention the additional $30B pension surplus that was seized by the government in 1999 and used to pay down the national debt."
Links and sources
Full text of CEC/NRPC letter
The Professional Institute of the Public Service of Canada press release
Posted: January 06, 2010
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