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Pension Plans: Who's
Minding the Store
By Louis
Erlichman
Canadian Research Director |
About a third of the
Canadian labour force (two-thirds of union members) belong to
employment-based (or private) pension plans. Pension plan members pay,
directly or indirectly, for their pensions, as part of their compensation
package. Even in “non-contributory” plans, they trade wages for pension
benefits. How do they know that they are getting what they bargained
for?
Pension plans in Canada are governed by a variety of
legislation. The federal Income Tax Act (administered by the Canada
Customs and Revenue Agency – CCRA) sets the upper limits on the level of
pension benefits which are eligible for the tax advantages provided to
registered pension plans, as well as pension fund investment
rules.
Each province (except P.E.I.) and the federal government
also have legislation which sets minimum standards on things like vesting
(when you have a right to a benefit), portability, survivor benefits and
other elements of the plans covering workers in their jurisdiction.
Workers in federally-regulated industries, like air transport, are covered
by the federal Pension Benefit Standards Act. Each jurisdiction has a
regulator, either within a government department or in a separate agency
(like Ontario’s Financial Services Commission and Quebec’s Regie des
Rentes), responsible for overseeing pension standards
legislation.
Pension regulation can involve complex technical and
legal issues. As a plan member, can you rely on the regulators to protect
your interests and ensure that you are being fairly treated – that plans
meet the requirements of the law and also are being administered as they
ought to be?
From the introduction of the first Canadian pension
standards legislation (in Ontario in the early 1960s), regulatory
oversight has been far from ideal. Regulators have always been given
limited resources, and it usually took a long time for them to even read
and approve plan texts and amendments as compliant with the law.
In
many ways, regulators tended to act on behalf of employers and plan
sponsors, rather than looking to protect the interests of vulnerable plan
members. This was highlighted by the 1986 Dominion Stores/Conrad Black
case, where the Court found that the regulator had not even shown a
minimum level of interest in protecting the rights of plan members when
surplus was to be taken from their pension plan.
While regulators
have been somewhat more conscious of the rights of plan members since the
Dominion Stores case, public sector cutbacks have cut already-inadequate
regulatory resources and made their job even harder. A further disturbing
trend is the shift from (inadequate) direct regulation and oversight to a
system that relies increasingly on the certification that the plan meets
legal requirements. It is a sort of unacknowledged
de-regulation.
Now, rather than requiring the regulator to read and
approve plan texts and amendments, the new system means that, in most
cases, the regulator accepts the plan documents certified by the plan
sponsor/employer and their actuaries (who also act as consultants to the
employer – a clear conflict of interest). With some exceptions, the
regulator’s role is simply to respond to complaints.
So, is anyone
minding the store?
Unfortunately, it is increasingly left up to
plan members to ensure that the plan meets legal requirements, that it
reflects what was bargained, and that things like benefit calculations and
options are correct.
Pension issues are frequently very technically
and legally complex, and pension plan texts seem often to be written to
confuse rather than explain (even for pension “experts”). While the law
requires the disclosure of pension information to plan members through
annual statements, and provides for member access to plan texts and
actuarial valuations, most people don’t even know what to look for, what
questions to ask, let alone the requirements of the law, or whether
benefit calculations are correct.
Even so, it is up to plan members
to be vigilant. Unionized workers can use the resources of their union. A
key is membership education and training, to provide all members with a
basic understanding of pensions and their plans. Each group and each local
needs to develop pension expertise.
It is important that there be
active pension committees at a local level (these are mandatory in Quebec,
and available on request in most other jurisdictions) to keep an eye on
the administration of the pension plan, and to build a local store of
knowledge on pension issues. It is a good idea to always have at least two
active pension representatives, so that there isn’t a sudden “pension
knowledge gap” when the local pension “expert” leaves or retires (or
becomes the employer’s pension administrator).
The IAM puts on
pension training programs, at the Winpisinger Centre and at the local
level, as do the Canadian Labour Congress and the provincial labour
federations.
If you have pension questions, or want to get some
training, get in touch with your local rep, or me at the Canadian
Office.
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October 3, 2002
FOR
IMMEDIATE RELEASE
MACHINISTS UNION WANTS 40 HOURS PAY FOR 40 HOURS
WORK
Sault Ste-Marie, ON – Employees at six automobile dealerships
here have been on strike since September 23 seeking something as simple as
being paid 40 hours pay for 40 hours worked.
The 120 members of the
of the International Association of Machinists and Aerospace Workers (IAMAW) Local 2332 say they are being shortchanged by employers because of
unrealistic flat rate scales for car repairs covered by
warranties.
“This is only one of many issues that finally sent us
on strike”, said Pat Murphy, staff representative for the IAMAW.
“What we have now are members working 40 hours and getting paid
for 36 hours of work. Most of this is a result of having cars under
warranty and extended warranty. What this means for us is we have to fix
the car no matter how long it takes. But we’re only paid a flat rate for
the repair. If it takes six hours to fix, and we’re getting paid for three
hours, you can see how we get shortchanged over the course of a week or a
month.”
“We simply want to get paid for the hours we work. If
dealerships in Thunder Bay can do it, we know dealerships in the Soo can.
We don’t believe the employer is bargaining in good faith. We believe they
wanted us to go on strike,” said Murphy
Another issue workers and
management are far apart on is the divisive tactic of offering different
pay raises to different groups. A 7% hike was offered to auto mechanics at
the same time as a 2% raise to people who do the bodywork.
“They
thought our mechanics would sell out the other groups, but we didn’t fall
for it,” said Murphy.
The union is also asking for:
– a
“sunset clause” on discipline cases where the employer can only go back a
certain period of time to use a worker’s employment record against him (as
opposed to 17 years, as they did in one case)
--one-tier salary for
general garage workers instead of the current three tiers
--progression
grid for apprentices,
--paid travel time when on training courses
required by the employer
--one year recall rights
CONTACT: Pat
Murphy, Grand Lodge Representative Canadian Office: 15 Gervais Drive,
suite 707,Toronto, Ontario M3C 1Y8 (416) 386-1789
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