Union launches campaign to rally support for pensions
Ads aimed at showing Islanders an alternate plan to reform public sector pension plans
Union officials are taking their concerns about the Ghiz government’s pension reforms to the public, hoping Islanders will join them in rejecting the changes.
The Canadian Union of Public Employees ( CUPE) is launching an ad campaign aimed at showing how an alternate plan to reform the pension put forward by CUPE and the Union of Public Sector Employees ( UPSE) offers more moderate changes but, they say, ultimately puts the fund in a better position.
“We want ( the public) to objectively look at what we’ve proposed and judge for themselves — is it fair? Is it responsible?” said national CUPE representative Bill McKinnon.
“And on the flip side, ask yourself, taxpayer, is what the government proposing fair? They have all the liability and all the control. Now they’re dumping half the liability or more on our members’ plan and want to keep control.”
Last month, the province announced an overhaul of the two public sector pensions in an effort to avoid hundreds of millions in pension shortfalls.
The changes include the elimination of guaranteed cost of living increases and a change in the calculation of pension earnings from the best three years to a career average, adjusted to inflation.
The government also pledged a special payment of $ 25 million into the pension fund every year for the next 20 years and lowered expected market gains.
These and other measures will see the province’s two pension plans funded to approximately 120 per cent.
But UPSE and CUPE say this is an overcorrection of the problem.
McKinnon says the union plan would see their pension funded to 100 per cent and would eliminate the current deficit within three years.
Instead of going to career averaging, the union plan would see the earnings calculation raised from the current best three years to the best five years of a member’s career.
Instead of eliminating guaranteed cost of living increases ( known as indexing), the union plan would reduce post- retirement indexing from 100 per cent to 60 per cent.
Both the government and the union propose to raise the age at which employees can draw an unreduced pension from age 60 to 62 or from 30 years of service to 32.
McKinnon says the union would also like joint ownership of the CSSF, giving unions half the benefit of any surpluses while also eliminating half of the province’s liability.
McKinnon says their plan just makes more sense.
“We’re saving the plan $ 192 million … we’re eliminating 50 per cent of the liability and in return we’re asking for joint control,” he said.
“This is a rock- solid plan to put this ( pension) plan on firm foundation today and has a structure that is not political, that is not beneficial to one side — government or unions.”
But Finance Minister Wes Sheridan says the union’s plan is not realistic.
In the event of a market shortfall, the alternate plan would immediately need to increase member contributions.
“We have flexibility built into our plan that will be able to absorb ( losses), that’s why we’re going to 122 per cent funded,” Sheridan said.
“We’ll be able to absorb some bad years and still pay indexing. Under their plan, the first time there’s a bad year, the active members will go up over two percentage points in contributions. The second bad year would take them over 5 1/ 2 per cent.”
As for joint ownership, Sheridan says the unions is not in a position to take this responsibility, as they could not cover their share of the losses in the event of a downfall without hiking employee contributions.
“I can’t do that. I have a legal responsibility to provide the very best plan, and this one doesn’t even come close.”
Sheridan says the other three provincial unions have rejected CUPE and UPSE’s proposal, using this as yet another example of why it is not viable.
CUPE and UPSE are planning radio and newspaper ads and a protest at Province House next week to voice their concern over government’s pension changes.
But Sheridan says his plan will go ahead regardless of their resistance. He says it is imperative to make these changes for the future sustainability of the pension funds.
Opposition Leader Steven Myers, meanwhile, is challenging government to guarantee union members their pension benefits won’t be reduced as a result of his plan.
“They committed their careers to this province, earned their pensions, and made plans to retire based on benefits that they are entitled to under their contracts,” Myers said.
“The changes that the Liberal government is proposing would break these contracts on the backs of Prince Edward Island’s retired public sector workers.”