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Federal PS unions prepare against expected attack on pension plans

"When you attack people's retirement savings, you are asking for the fight of your life and I think it would be a most unwise thing for any political party to do.”

Ottawa (20 January 2010) – Canada’s 18 federal public service unions are meeting today to develop a united plan of action to counter what they believe is an imminent attack on their members’ pension plans by the Harper government.

It appears that the federal government are using current annual deficits in its public sector pension plans as justification to unilaterally introduce legislation to cut benefits upon the return of Parliament later this Spring

John Gordon, president of the Public Service Alliance of Canada (PSAC), told CanWest that he believes the Conservatives have long had public sector pensions in their sights. PSAC and its sister unions are warning the government to be prepared for a fight should it move forward with changes to their pension plans.

Ron Cochrane, the union co-chair representing all federal unions on the management/union National Joint Council, was reported in the Ottawa Citizen as saying, "nothing would galvanize even the most apathetic public servant like touching their pension." "When you attack people's retirement savings, you are asking for the fight of your life and I think it would be a most unwise thing for any political party to do. And if they did it to public servants, they would have to do it to the military and RCMP, and do they really want to annoy them?" said Cochrane.

The federal government’s s’ Public Service Pension Investment Board (PSPIB) is responsible for investing federal pension contributions and ensure that there would be sufficient funds available in the future to cover the government’s obligations to its retirees. In 2008-2009, the PSPIB took a financial hit on its investment portfolio, whose value plummeted by $5.1 billion as a result of the international financial crisis. To make matters worse, $4.4 billion in federal employee pension contributions made that year also evaporated.

The unions recognize the significance of a total loss of $9.5 billion over the course of two years but point out that the deficit wouldn’t likely exist if the government had not confiscated the $30 billion pension surplus in the plans in 1999 to pay down the national debt. The 18 unions and several retiree groups sued the federal government claiming that employees deserve at least a share of the surplus; the matter still remains before the Courts.

Federal employees are prohibited under the Public Service Labour Relations Act (PSLRA) from negotiating protections and improvements in their pensions. The unions have has long called for joint trusteeship of its members’ pension plan in order that they have an equal say in the management of the plans.

During the December 2009 meeting of Finance Ministers in Whitehorse, federal Finance Minister Jim Flaherty made comments about the "handsome arrangements" of all public servants indicate that defined benefits pensions are under the microscope by his officials in Ottawa.

The federal and provincial governments are being egged on to cut public service pension plans by right-of-centre think-tanks such as the CD Howe Institute and the Fraser Institute, or from associations that represent business – for example, the Canadian Federation of Independent Business. Instead of promoting an improvement to the limited pension benefits the private sector provides to its own workers and redirect their priorities towards the needs of all Canadians, these organizations advance pension reform from a “levelling down” approach to retirement security, whereby all Canadians are forced to get by on inadequate pensions.

Earlier this week the C.D. Howe Institute released a report that concluded the pension plans of federal public service workers were going to cost billions more than expected. Its analysis, however, is suspect given that it used different accounting practices to come up with its inflated conclusions than those used by pension actuaries for defined pension plans as well as the PSPIB chief actuary who reviews the pension accounts, and the federal Auditor General.

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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE