“For people without defined benefit pension plans, there’s an ever-present fear of seeing a significant drop in their retirement income.” — Larry Brown, NUPGE President
Ottawa (14 Nov. 2016) — New federal government legislation will mean major financial worries for workers after retirement if it isn’t stopped. The legislation, Bill C-27, changes the Pension Benefits Standards Act to make it easier for employers to pressure workers into agreeing to have their pension plans changed from defined benefit to targeted benefit. It would also make it possible to change benefits people have already earned.
Defined benefit plans safest route to financially secure retirement
With defined benefit pension plans people know how much their pension will be. Defined benefit plans make it easier to plan for a financially secure retirement.
That is not the case with defined contribution pension plans or targeted benefit pension plans. With both defined contribution and targeted benefit plans, what is happening in the stock market can result in pension benefits being cut. Instead of the employer taking the financial risk, it’s the workers.
“For people without defined benefit pension plans, there’s an ever-present fear of seeing a significant drop in their retirement income,” said Larry Brown, President of the National Union of Public and General Employees (NUPGE).
Bill C-27 enables employers to pressure workers to abandon defined benefit pension plans
Measures in Bill C-27 will make it a lot easier for employers wanting to abandon defined benefit pension plans. For the first time it will become possible to take pension benefits that people have already earned away from them.
An added concern is that targeted benefit pension plans would not be governed jointly.
More workers need defined benefit pension plans
In a letter to federal Minister of Finance Bill Morneau, Brown suggested that more, not less, defined benefit pension plans were needed.
“When the federal government agreed to expand the Canada Pension Plan (CPP), it recognized that defined benefit plans were the best way to ensure workers have a financially secure retirement,” said Brown. “Instead of weakening defined benefit pension plans, the federal government should be finding ways to help more workers get the retirement security they provide.”
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 370,000 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