In mid-August, all members of the Canada Post Defined Benefit pension plan, including retirees, will be receiving a letter from Canada Post seeking “feedback “ about various options to deal with the pension plan’s solvency deficit.
Solvency Evaluations are a required accounting procedure. A solvency evaluation is calculated on the assumption that the pension plan is wound up and determines how much money the pension plan would need to cover the pension benefits of all retirees, survivors, and current workers. The Canada Post Pension Plan has a solvency deficit because it does not have enough money to do this in the extremely remote possibility that our pension plan is wound up.
Major provincial public sector pension plans in BC, Ontario, Manitoba, Quebec, and Nova Scotia are not required to undertake solvency evaluations or make solvency payments. Some have adopted alternative accounting procedures to replace the solvency evaluations.
Continuing low interest rates have made it difficult for pension plans to recover from Solvency Deficits. In 2017, Canada Post reported that a 1% increase in the long term interest rate would result in a $4.9 billion decrease in solvency obligations.
The current provisions of the Pension Benefits Standards Act (PBSA) require Canada Post to contribute more money to the Pension Plan to lower the pension solvency deficit. From 2014-2017 Canada Post received solvency relief from the Federal Government. This meant that Canada Post did not have to make solvency payments. In 2018 and 2019 Canada Post was not required to make solvency payments due to a change in the PBSA legislation. However, beginning March 2020, Canada Post is responsible for making solvency payments. These payments would be enormous and would do nothing to improve\expand service and maintain a healthy postal system. We believe that is the best approach for a healthy pension plan.
For those retirees sending “feedback” to Canada Post, the email address is: firstname.lastname@example.org . The mailing address is: C&C Group, 2701 Riverside Drive, Suite N0660, Ottawa, ON K1A 0B1.
We are suggesting your feedback include all or some of the following:
“I am a Canada Post retiree. I recognize that Canada Post could not operate or have the financial capacity to grow if required to make solvency payments. Unfortunately, the options you present in your letter fail to include the one that could lead to a real solution.
Instead of simply requesting Canada Post to seek temporary relief from solvency payments (option #1) I think that a better option would be that Canada Post approach the Federal Government to seek permanent exemption from making solvency payments. Canada Post had previously proposed this option in the 2008 Strategic Review of Canada Post.
I also want to strongly remind Canada Post that I do not want any changes or rollbacks to my Defined Benefit Pension Plan. Leave my Canada Post Defined Benefit Pension plan alone.
Finally, I know that my pension would be more secure if Canada Post expanded the services they offer. This includes providing postal banking, check in for seniors, and a more environmentally sustainable post office.
In the 1st week of July, CUPW completed the presentation of its evidence in the arbitration process for new collective agreements for both the RSMC and Urban Operations bargaining units. . It is now the turn of Canada Post to bring its evidence forward, once arbitration hearings resume in late August.
There have been some improvements signed off over the lengthy period of negotiations in both the RSMC and the Urban units, but most items, including wages, are still in dispute. Retirees will note that Canada Post is not demanding any changes or rollbacks to our Canada Post Defined Benefit Pension Plan. It’s a victory, but we know further attacks from the Federal Government are coming.
OFSI, the Government agency regulating our pension plan, has proposed “administrative changes” allowing for reduction of Defined Benefit pensions. The President of the Canadian Labour Congress Hussan Yussuf has described these proposals as “for all intents and purposes identical to that contained in Bill C-27 for the purposes of converting accrued defined benefits to target benefits”.
CUPW will have the right to reply evidence once Canada Post has completes its evidence. Both parties will then present legal arguments based on the evidence presented, before the arbitrator writes her decision. The arbitrator stated that her decision will come before December 31, 2019.
Brother JC Parrot and Sister Karen Kennedy were observers to the CUPW Convention in May. A resolution supporting NORPW was recommended by the Committee, we had a NORPW table with our materials for the convention delegates, and Brother Parrot was given a few minutes to address the Convention . Our relationship with CUPW is very important and we must all work together to protect our pensions. We are finalizing our NORPW Action Plan to include specific ways we can enhance our work with CUPW. We hope to meet in October with the new CUPW NEC (National Executive Committee) elected at the May Convention.