Sorenson announcement another attempt to undercut pensions: Workers don’t need more risk in their retirement security
The Conservative government is once again making proposals that would load the dice against working Canadians when it comes to their pension plans, says CLC president Ken Georgetti.
“Time and again this government has promoted ideas that would make it more difficult for Canadians to achieve retirement security,” Georgetti says. “This latest announcement fits into that category.”
Georgetti was responding to an announcement by Kevin Sorenson, the minister of state for finance, that Ottawa will initiate discussions about what it calls “target-benefit” pension plans. These would apply Crown Corporations such as Canada Post and federally regulated private-sector companies, including transportation, banking, telecommunications and other sectors.
“The minister claims that he wants employers and workers to share the risks of pension plans but make no mistake about it,” says Georgetti. “The goal here is to allow employers more opportunities to dump defined benefit pension plans and existing liabilities and shift the risk to workers.”
Georgetti says that many employers in both the public and private sectors have been ditching defined benefit pension plans and replacing them with defined contribution plans, where the payout in retirement is entirely dependent on the success of an individual’s pension investments.
“Defined contribution plans have been disastrous for workers, especially in the current environment of high fees, low economic growth and low interest rates,” Georgetti says. “There is a lot of unhappiness about this so now Ottawa is promising another fix, but this proposed shift from defined-benefit pension plans to target-benefit plans is a loss for workers. All other things being equal, workers will stand a greater chance of seeing their pension benefits reduced.”
Minister Sorenson says that what he calls a third option would apply to workers in Crown corporations and federally-regulated private companies. But Georgetti says the idea will be used as a wedge to undercut pensions in the civil service and in the private sector.
Georgetti adds, “Sixty per cent of Canadians have no work place pensions at all and the federal, provincial and territorial finance ministers have been talking for years about the need to improve the Canada Pension Plan to deal with this crisis. Every time the provinces came close to agreement on how to improve the CPP, Ottawa threw sand in the gears to prevent it. Now they are doing it again.”
Georgetti says the CLC will continue to be vocal in protecting workers’ pension benefits. “We will continue to focus on the fact that 12 million Canadian workers have no workplace pension plans. The real solution to that is a phased in doubling of CPP benefits.”
Former Bank of Canada governor David Dodge and an array of other experts have said that improving the CPP is by far the best way to provide income security in retirement.