MYTHS ABOUT OUR PENSION PLAN (10,11,12)

cupe1975Pensions

MYTH

Federal and provincial regulations limit member risk sharing and will leave the University with increased financial responsibility

FACT

We are not aware of any such hard limits that are not routinely waived by the federal government. Members in SK and elsewhere around the country routinely contribute directly to deficit payments without regulatory issues. Most public sector workers are in jointly-sponsored plans with full risk-sharing.

MYTH

CUPE’s proposed governance structure is complex and costly

FACT

Our governance proposal was clear and simple and follows best practices for pension governance from around the country. The pension plan already has an advisory committee which meets regularly. Our proposal would have essentially formalized this committee to act as the joint administrator of the pension plan. In our view, this is would not lead to any substantial increase in costs, and would benefit the University by sharing the current regulatory and compliance risks it faces alone in the current arrangement.

We will of course continue to have differences of opinion on the pension plan. But we want to work those out at a joint table, rather than having changes imposed by the University (as the University has threatened to do). That is not a “complexity” – that is honest bargaining to find mutually-agreeable solutions, which we remain committed to doing. If the University had specific concerns with our proposed governance framework, they could have discussed them at the table, rather than simply rejecting our compromise proposal as a whole.

MYTH

“The university has been exploring solutions both outside and inside of negotiations with CUPE 1975 for 10 years to make the Non Academic Pension Plan sustainable”

FACT

We were clear with the University that our members do not want to give up their secure Defined Benefits in retirement, which cannot be delivered with a contribution limit for the University. We did, however, propose a clear compromise on the employer’s concern about risk – effectively offering to meet them halfway and share risk on a 50/50 basis which the University rejected. This builds on substantive proposals we made in the last round of bargaining that would have likewise shifted costs and risks. CUPE has been making significant efforts to make pension proposals that directly address the University’s stated concern.  The University, on the other hand, has not moved from their insistence on Defined Contribution or Target Benefit plans since 2012.

 

 

 

Negotiations Update

cupe1975Bargaining

TO:  ALL MEMBERS OF CUPE LOCAL 1975

Member Communique: 

Bargaining Update

At the union’s request, the parties returned to the bargaining table on April 5, 2019.  The intent of the meeting was to continue discussions about the union’s pension proposal.  While discussions were cordial, unfortunately we did not make any progress.

The Essential Services Tribunal will continue in May and June with closing arguments scheduled for June 14, 2019.  We can expect a decision from the Tribunal at the end of June or early July.  No job action can be taken until a decision is reached.

No further bargaining dates are scheduled.

AI/TD/tg.cope491

 

MYTHS ABOUT OUR PENSION PLAN (9)

cupe1975Pensions

MYTH

CUPE did not propose a “true” Jointly-Sponsored Pension Plan since surpluses are spent on member benefits and do not benefit the University

 FACT

Our proposal was a jointly-sponsored plan with a very conservative approach to surplus use, which we specifically chose to better meet the University’s stated concerns about risk. Plan surpluses can be used for different things – they can be spent on benefit improvements, used to reduce or eliminate required contributions to the plan (a contribution holiday), or they can remain in the plan to act as a buffer against future downturns. The University is incorrect that we proposed surpluses would only be spent on benefits. Our proposal actually said that all surpluses would not be spent and would remain in the plan (as a buffer against future downturns) until the plan was 120% funded. This is a very conservative approach. Having this buffer would help in keeping the plan out of deficit in a future downturn. Most other jointly-sponsored plans in the country would start “spending” surplus on benefit improvements at much lower levels. Having a high buffer like this, however, would help prevent contributions from rising in response to a future market downturn (i.e. directly addressing the main concern the University raised about pension costs). We could have left this buffer out and said that all plan surplus was for benefit improvements, but we did not. We set this high bar that directly benefits the University by helping to keep contributions stable. The University’s critique on this point reveals the reality that they don’t like our proposed restrictions on their ability to take even more contribution holidays in the future. We also indicated at the table that we were prepared to talk more about the surplus provision if the University was not satisfied with it, but the University never engaged on this point, rejected our position and is now raising these points in public instead of at the bargaining table.

 

MYTHS ABOUT OUR PENSION PLAN (8)

cupe1975Pensions

MYTH

“The defined benefit pension that you have earned up to the point of any changes to the plan CANNOT be changed and is payable monthly for your lifetime”

“Current pensioners will not be affected by any future changes”

FACT

These statements are currently true, but there are no guarantees that they will always be true. The Saskatchewan Pension Benefits Act is the source of the legal obligation that says that past DB pension promises cannot be later reduced. But this legislation can be changed. And similar legislation has been changing in very troubling ways in other provinces in recent years.

In 2012, the government of New Brunswick changed its Pension Benefits Act to give employers the option to convert their existing Defined Benefit plans (where benefits cannot be reduced) into Target Benefit plans (where benefits can be legally reduced). These conversions are permitted not only on a go-forward basis, but also on a retroactive basis for DB benefits that have already been promised. Essentially, the rewrite of the NB pension law allowed employers to legally walk away from the pension promises they had made to both active workers and retirees. Most of the public sector plans in the province have since been converted under this law.

The governments of Prince Edward Island and Quebec partially followed suit for certain public sector plans. The Trudeau federal Liberal government has tabled similar legislation for federally-regulated pensions. Manitoba and Nova Scotia are in the midst of consultations about whether to import these laws to their jurisdictions.

The Saskatchewan government could follow suit and pass similar changes to our province’s Pension Benefits Act. If they did so, the University would have the option of converting your already-earned promised pension into a promise-less “target” benefit. If that option is on the table for the University, we would need two things to stop them: 1) control over our pension plan, 2) a local membership that continues to be fully committed to preserving the DB plan (which would not be the case if either of the University proposals were accepted).

The University likely emphasizes the points above because they want members who are close to retirement to feel that their stakes in this fight are relatively low, since most of their pension is already “banked” and fully protected. If we accepted the University’s proposal to move into a DC plan, how would this member’s pension be protected if our provincial laws were changed? Why would a future membership fight to preserve the DB plan of retirees, when most active members never even participated in the plan?

Pensions in Canada are under attack, with even past promises being put on the table. We will need the next generation to fight to protect our pensions in retirement. As always, we are stronger together.

 

ESSENTIAL SERVICES TRIBUNAL DATES

cupe1975Bargaining

The Essential Services tribunal will continue on:  

  • May 2, 3 (Employer evidence)
  • May 22, 24 (Employer evidence)
  • June 4-7 (Union evidence)
  • June 14 (Argument)

No job action (including withdrawal of services or lockout) can commence until we receive a ruling from the Tribunal.

We will be back at the bargaining table on April 5th and will provide an update after that meeting.

 

MYTHS ABOUT OUR PENSION PLAN (7)

cupe1975Pensions

MYTH

 “The DB plan type that has been on the decline over the past number of years across the country”

FACT

While fewer private sector employers are offering DB pension plans, this plan type remains standard in the public sector.

91% of public sector workers who have a pension plan have a DB plan.

DB plans remain standard in the University sector, particularly for non-academic staff unions that CUPE represents.

Essential Services Tribunal Hearing Update

cupe1975Bargaining

The Essential Services Tribunal hearing commenced on March 26-28.  During those three days, testimony was provided by five of the ten employer witnesses.  We are in the process of setting additional dates to continue the hearing.  Once the University’s witnesses are finished, CUPE will submit its evidence.  We will continue to update you throughout the process.

 

MYTHS ABOUT OUR PENSION PLAN (6)

cupe1975Pensions

MYTH

The University is offering a “competitive pension plan”                                                                                                                   

FACT

The University has offered two different pension plans (Defined Contribution or Target Benefit) that share the same basic legal structure. In both proposed plans: 1) the University bears no risks and 2) plan members bear all of the risks. This is a complete change from your current DB plan, which provides secure, promised pension benefits that members can count on through their entire retirement. The University says they do not want any pension risk. They would prefer to see plan members with no real pension security, where your life in retirement will be tied to the whims of the stock and bond markets. These insecure types of pensions are not in any way comparable to the current DB plan.

Upending the structure of the plan is apparently not enough, however. In both scenarios, the University also proposes lower contribution rates, which would save the University millions of dollars per year. For the average CUPE 1975 member, the employer would save about $2000 per year! (in addition to dumping all of the pension risk onto plan members).

Roughly speaking, the “Target” benefit option actually aims to deliver about 25% less than your current DB plan does! And since the benefits are not promised like your DB benefits are, you may very well receive less than this. It’s all up to the markets and if you happen to work and retire at the “right” time.

The DC option is even worse. We can’t say what it will deliver compared to the DB plan, since the benefits here are wholly dependent on market returns. This uncertainty is exactly why we don’t like DC plans. Given the contribution rates and the structure of the plan, the proposed DC plan is probably worth some 40-50% less than the DB plan you currently have.

Complete risk shifting, massive cost savings and huge reductions in benefit value do not result in a “competitive” pension plan to your current DB plan!

CURRENT PLAN UNIVERSITY PROPOSALS
Current Defined Benefit (DB) Defined Contribution (DC) Target Benefit (TB)
Ongoing Cost to University (as % of Payroll) 11.37% 6.82% 7.5%
Annual University Savings (as % of Payroll) N/A 4.55% 3.87%
Annual University Savings (for an average CUPE member salary $50,000) N/A $2275 $1935