'This is very welcome news for workers in Quebec, but falls short in guaranteeing pensions,' notes NUPGE National Secretary-Treasurer Larry Brown.
Quebec City (15 January 2009) – Quebec’s Minister for Employment and the Social Solidarity, Sam Hamad, yesterday introduced a bill in the National Assembly which would allow the Quebec Pension Plan (QPP) to take over the management of insolvent pension plans and guarantee retirement income for five years to those who are entitled.
The bill potentially covers 950 private company pension plans in the province with assets worth about $100-billion, of which nearly a million workers and pensioners in Quebec are registered in.
If the legislation is successful, the protection could be extended beyond the five years and perhaps become permanent. With all opposition parties supporting the bill, it is expected to be adopted today. The legislation will be retroactive to Dec. 31, 2008.
The legislation, however merely guarantees the pension payments at their underfunded level. If for example a pension plan is funded at a 70 percent solvency level when the Quebec government takes over the plan, then a person who was supposed to receive $1,000 a month will only receive a $700 monthly benefit for five years from the government.
Larry Brown, National Secretary-Treasurer of the National Union of Public and General Employees (NUPGE) offered tepid support for the news. “Although this is somewhat welcome news for workers in Quebec, it falls short in providing workers a full guarantee of their pension benefits.”
He noted that the Ontario system is far superior. The Ontario government was the first and only jurisdiction to implement a Pension Benefits Guarantee Fund which guarantees payments of monthly benefits of insolvent pension plans to the maximum pension or $1000, whichever is lower. It is funded by assessments on employers sponsoring defined benefit plans.
“There has been far too little attention paid to the crisis that pensioners would face if their pension plan falters,” stated Brown. “Admittedly, Quebec’s proposal does address the situation, but quite frankly this plan appears like mostly window dressing.
Brown noted that NUPGE has been one of the voices calling for just such a guarantee from governments that pension plans will be protected, and at first the response was less than satisfactory.
In December 2008, NUPGE released a policy paper titled Pensions and the Economic Crisis. Among a number of legislative and public policy initiatives aimed at promoting and protecting existing pension plan, the paper recommended that in the short term, the federal government and provincial governments must ensure workers’ pension plans are fully protected. Governments need to guarantee that pension funds will not go under.
The policy paper stated, “If our federal government can use public funds to help stabilize Canada’s financial institutions during difficult economic times, then it should be able to ensure that pension plans that workers rely on for the retirement security are protected. This would provide important economic stimulus while guaranteeing that workers retire in dignity.”
The paper also called for the establishment of a national Pension Benefit Guarantee Fund encompassing all Canadian jurisdictions. The paper noted, “This would go a long way toward protecting the most superior pension plans in Canada – a vital goal that needs to be maintained if we’re to protect the financial retirement security of current and future Canadian workers.”
The other measure contained in the proposed legislation was to extend from five years to ten years, the period of time Quebec companies will have to make up deficits in their pension plans. The market value of the assets of Quebec's private pension plans is currently at a 70 percent solvency rate, which represents a $22-billion shortfall.
The legislative measures bill were worked out and agreed to by a committee chaired by the Minister and included representatives of the Federation of Labour, the Confederation of the National Unions, the Quebec Employers’ Council and the province’s Chamber of Commerce.
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