September 22, 2012 - No. 35

In the Parliament

Harper Government's Insidious Attack on
MPs' Pensions

In the Parliament
Harper Government's Insidious Attack on MPs' Pensions

For a Pro-Social Pension Regime

Workers Discuss Pension Reform
DBRS Neo-Liberal Study of Defined-Benefit Pension Plans -- Parts 1-4 - K.C. Adams

In the Parliament

Harper Government's Insidious Attack on
MPs' Pensions

Members of Parliament should stand with Canadians and the necessity for pro-social pension reform and denounce the Harper government's attack on their pension plan. Making MPs' pensions an issue in Parliament is a cheap publicity stunt to justify the ever growing assaults against the public sector and public right and, specifically, to attack the right of Canadians to standard defined-benefit pensions acceptable to themselves.

Highlighting MPs' pensions which are superior to those of most Canadians is a cheap neo-liberal trick to open an attack directly on the defined-benefit pensions of public sector workers and others. The assault on MPs' pensions is to divert from the real issue that government has failed to guarantee a standard defined pension for all Canadians with benefits paid directly from general public revenue collected from all public and private enterprises based on their gross income. The independent politics of the working class favour defined pensions for all. This would be a great step forward in a new direction to strengthen the Canadian economy and the security of all throughout the lifecycle of childhood, maturity and retirement.

A neo-liberal anti-social line is to attack the universality of a social program or in this case, to highlight a specific group that has the power to direct government funds towards its pension benefits. The fact that a specific group has a position of privilege and receives defined pension benefits when certain members of that group are said to be unqualified because of a conflict of interest or in possession of great personal wealth is being used to undermine the entire social program of defined-benefit pensions.

Misusing the reality that eleven million Canadians have no pension plan at all, Harper targets MPs, public sector workers and other Canadians who have defined-benefit pensions. Harper is using his attack on MPs' pensions to push his neo-liberal austerity agenda to lower the standard of living of Canadians so that the economy can be better milked to pay the rich under conditions of recurring economic crises.

Liberal MP Marc Garneau found himself sucked into the Harper fraud and is quoted by Globe and Mail saying that he is "ready to do what every other Canadian does by facing pension changes. I'm prepared to accept lots of changes because that is what Canadians want and also [because] Canadians are very concerned about their own pensions at the moment."

The changes Harper and Garneau have in mind are not for the better. The changes are to drag all Canadians down to a level without defined-benefit pensions instead of raising everyone up to security in retirement. Canadians are "very concerned about their own pensions at the moment" and want the situation resolved in a pro-social direction that favours them. Attacking MPs' pensions will not solve any problem in the economy but will increase the propaganda against defined-benefit pensions for all.

Concerned Canadians demand to know how playing along with the Harper dictatorship's attack on public sector workers' pensions is going to improve their retirement security. It will not. Conciliating with the neo-liberal attack on any pension makes Canadians more nervous and vulnerable because it plays right into Harper's broad assault on pensions under the backward banner of austerity.

Garneau added to his posture of seeming to want a direct role within the Harper dictatorship saying, "We've seen what this government plans to do with [Old Age Security], we've seen the fragility of the economy, so yeah. We're all in this together and we're ready to do our bit."

The "fragility of the economy" arises in large measure because the government refuses to renew the economy under the pro-social banners: Stop paying the rich! Increase funding for social programs! Manufacturing yes, nation-wrecking no!

The government agenda is to support the global monopolies and their monopoly right to deprive the people of their public right to Canadian-standard livelihoods, pensions and the building of a self-reliant diverse economy based on manufacturing. The austerity agenda is to ensure the economy is geared to paying the rich even under conditions of economic crisis.

Defined pension benefits for all at a Canadian standard would boost the economy and promote its extended reproduction. Instead, the Harper dictatorship has already raised the pension age to 67, has allowed many monopolies to renege on their pension obligations by using the bankruptcy courts to change the promised contracted arrangement, and has opened a broad front against public sector and other defined-benefit pensions.

William Robson, president of the capital-centred C.D. Howe Institute is most incensed at a precedent within the MPs' pension plan, which the working class may latch onto as a good and progressive concept for all Canadians. MPs' pension benefits are not funded through a savings plan constantly seeking the highest return and vulnerable to violent downswings, but from general revenue. This concept holds that pension benefits, similar to wages, come from the added-value the working class produces within the current economy.

Quoted in the Globe and Mail, Robson said, "What's even more troubling about the political pension plan is that it's unfunded -- and merely paid out of government revenue. There's not one cent backing those promises. It's got to come out of current tax revenue."

That is the main positive point Mr. Robson! Not only is the pension benefit defined, the claim comes directly from the socialized economy from enterprises active in the Canadian economy. This progressive pension concept should be extended and applied to all Canadians. All these pension savings plans are vulnerable and could collapse at any time; they guarantee nothing when challenged and put under pressure by the monopolies. Ask Nortel retirees how secure their promised pension savings plan and benefits have been and how much can be converted into use-value. Ask retirees and workers of Fraser Papers, who had their pensions cut by up to 40 per cent when Brookfield Asset Management used the bankruptcy court to deprive workers of their pension benefits and subsequently used the courts to block a civil suit.

Important to note as well that right in the midst of the opening brouhaha over MPs' pensions, the neo-liberal Harper front group the Canadian Taxpayers Federation, which has close ties with the monopoly-controlled mass media, was allowed to use a plane to fly its banner around Ottawa attacking MPs' pensions. Just two weeks earlier, the RCMP had ordered a plane flying a banner criticizing Harper to return immediately to its airport.

The Workers' Opposition denounces Harper's anti-social offensive against pensions including MPs' pensions and calls on all Canadians to step up the battle to defend and guarantee the defined-benefit pensions that exist, those in the public sector and others, and fight for government guaranteed defined pension benefits for all at a Canadian standard.

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For a Pro-Social Pension Regime

Workers Discuss Pension Reform

Discussing an alternative pro-social pension regime and the practical politics
necessary to bring it into being

Within days of each other, the financial ratings agency Dominion Bond Rating Service (DBRS) declared the imminent death of company defined-benefit pension plans while the C.D. Howe Institute denounced as irrational the array of government-sponsored pension savings plans and lack of defined benefits for retirees. This contradictory assault on people's consciousness demands workers step up their own discussion of the situation and develop their practical politics to bring into being a pro-social pension regime that makes pensions with defined benefits a reality for all.

The right to a retirement at a Canadian standard is firmly established; the question is how to bring this about through conscious acts of working class practical politics. Lack of money is not the issue. The goods workers produce and services they provide are more than sufficient to guarantee a retirement for all at modern Canadian defined standards. Governments refuse to do so and should be held to account for their social irresponsibility. Big companies increasingly deny the claims of retired workers to the defined benefits they were promised and the need for a dignified and cultured retirement, such as U.S. Steel's unilateral elimination of adjustments in pension benefits according to price inflation or by using the fraud of bankruptcy à la Nortel and AbitibiBowater (Resolute Forest Products). Smaller companies plead that they do not generate enough constant added-value to meet the claims of their retirees. The working class does not and cannot accept this failed pension regime; it must break new ground in finding a pro-social alternative and bring it into being in a practical way.

Social Capital Under the Control of Workers

The claims of workers on the gross domestic product are a huge reservoir of social capital that could be mobilized as both a collective reserve fund for pensions and a source of capital investment in projects under the control of the working class. The pooled funds of workers in defined-benefit plans, defined-contribution plans, RRSPs, Canada and Quebec government pension plans and all other forms of savings are enormous. The point is to take these funds out of the hands of self-serving capitalists and put them to use under the control of the working class. This would entail restricting the claims of capitalists on workers' savings and on any added-value produced by active workers in projects, cooperatives or enterprises financed by workers' savings funds. Possibilities exist to use social capital under working class control to fund defined benefits in retirement and build the nation and its productive capacity in all sectors, especially manufacturing.

Workers have to develop their own initiative as they face the current reality that both the global monopolies and their political representatives and parties refuse to take the issue of defined-benefit pensions seriously. Governments at all levels have failed to address the pension issue and the big monopolies are waging a campaign to eliminate company-sponsored defined-benefit pensions. Even the pro-big business C.D. Howe Institute warns low and middle-income workers not to put money in the government's new pension savings plans because Service Canada will simply "claw back" an equal amount of benefits during retirement.

Meanwhile, DBRS goes to great lengths in a press release and related study to find reasons for companies to eliminate defined-benefit pension plans and replace them with this or that savings plan under the control of capitalists. DBRS blames the failure of the current pension regime on the recurring economic crises and the inability and refusal of the private monopolies to manage properly the funds under their control and solve the problems of workers' retirement. DBRS says such issues are beyond the "core competence" of companies.

Rather than taking governments to task for refusing to act in a socially responsible manner to solve the pension issue, DBRS throws the problem back at individual workers who are told to fend for themselves through savings plans. In a strange twist, DBRS suggests that individual workers have the "core competence" to solve their retirement problems while the ridiculously high-paid "captains of industry" and the companies they manage do not have a clue.

In response, the C.D. Howe Institute says having an individual save for retirement is an absurd approach to a social problem but does not give any concrete suggestions how to transform the anti-social pension regime into a pro-social one.

Workers are increasingly frustrated with all of them and are organizing to force the socialized economy and political institutions to recognize and serve their collective interests.

Join the discussion and elaborate the independent positions of the working class to establish a pro-social pension regime for all!

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DBRS Neo-Liberal Study of
Defined-Benefit Pension Plans

Part 1
The Neo-Liberal Chicken Little Story of the Collapse of
Defined-Benefit Pension Plans

On August 17, the Dominion Bond Rating Service issued a press release and study entitled "Pension Plans: Discounting into the Danger Zone." The DBRS press release and study is a broad attack on workers' rights to pensions and defined-benefit pensions in particular. DBRS follows a common neo-liberal method of describing a situation, whether real or not, which reinforces a predetermined conclusion. The description becomes a form of storytelling repeated so often and in various ways that the story becomes an anti-conscious reality. The story continues without debate towards a predetermined anti-social end that appears to emerge spontaneously from the story itself.

The neo-liberal story asserts an anti-social reality that is presented as unknowable in its essence without a beginning and without historical contradictions that must be resolved for society to solve its problems and move forward. All policies and actions surrounding the neo-liberal story must conform to a prescribed resolution for which no alternative is possible. The process itself precludes any conscious participation of individuals in acts of finding out, discussion, the forming of an agenda or practical politics for a pro-social alternative. Blocking the working class from participating in practical politics to resolve economic, political and social problems is an important aspect of neo-liberalism.

The neo-liberal method is widely used throughout the world as an ideological and political tool to push the anti-social offensive. For example, the finances of a state are described as terrible and heavily indebted. In Europe, the U.S., Canada, Quebec or Ontario the situation in the imperialist system of states is described as similar or so the story goes. The only possible action flowing from the neo-liberal story of debts and deficits is austerity, attacks on social programs and concessions from the working class. Any discussion of a pro-social alternative is dismissed as absurd because only austerity and concessions can possibly emerge from the story of debts, deficits and global competition. Harper, Charest, McGuinty et al preach this neo-liberal mantra of debts, deficits, global competition, anti-social austerity and concessions as leading to the Holy Grail of economic renewal for the monopoly capitalists. Any pro-social alternative is banned from thinking and practical politics, as heretical and contrary to the neo-liberal story, which is repeated ad nauseum in the mass media.

The DBRS Neo-Liberal Story

DBRS introduces its study with a press release that describes a dire situation facing defined-benefit pensions and predicts their collapse. Following a description of its own creation, DBRS asserts that defined-benefit pensions are doomed and that individual workers must fend for themselves using individual, government or company defined-contribution savings plans that will provide them undetermined pension benefits in retirement.

Notice the use of emotive words in the DBRS press release to embellish the story and make it appear unassailable:

"The continued low interest rate environment has contributed to a ballooning pension funding deficit.... Many plans have now entered the danger zone of funded status.... DBRS notes that 2011 saw an increasing portion of pension plans slide into this danger zone of underfunding.... More than two-thirds of plans reviewed this past year were underfunded by a significant margin.... Based on this pension environment, DBRS has revised its previously optimistic outlook on pension funding.... DBRS expects that defined-benefit plans will be slowly unwound and removed over the next 40 years.... We're seeing fewer companies offering defined benefits to new employees.... The study notes a growing trend of employers offering workers defined-contribution plans rather than defined-benefit plans in the United States, which is reflective of the trend in Canada and abroad as well."

The neo-liberal method does not require that a description conform to reality or even less concern itself with how or why the described "growing trend" came into being.

DBRS defines the "danger zone of underfunded status ... as a funded status of less than 80%." However, the DBRS study quotes the Office of the Superintendent of Financial Institutions, the primary regulator of private pension plans under federal jurisdiction as saying, "In 2011 the average funding ratio was 81% (versus 81.7% based on the DBRS sample universe)." "Average" generally refers to a typical amount or level of something. The DBRS average of 81.7% of its sample universe could hardly be considered as "two-thirds of plans underfunded by a significant margin." But then, neo-liberals never let even their own facts spoil their story.

Continuing to undermine its own story, the DBRS study says, "47% in the DBRS sample universe" of federal and provincial defined-pension plans "are healthy" based on its own "criterion." Yet contrary to its own finding of a "healthy 47%," the DBRS press release insists, "more than two-thirds of plans reviewed this past year were underfunded by a significant margin." The press release was the basis for most mass media reports with only a rare journalist bothering to investigate the actual study.

The content of several tables and comments in the study, for example in the section "Overall Performance from 2002 to 2011," also contradicts the DBRS Chicken Little story for defined-benefit pensions. The tables show how funding status can dramatically improve with even a slight uptick in the economy. Of the 451 plans examined, 374 in 2006 and 389 the following year improved their funded status. From 2004 through 2007, employer contributions decreased with some employers even taking out surpluses because funding status had markedly improved. In 2007, plans underfunded by more than 20 per cent fell to around 13 per cent of the total while those with a surplus grew to almost 40 per cent.

With the onset of the economic crisis in 2008, the assets of most plans fell causing a rise in underfunded status similar to the crisis in 2001 but still nowhere near the assertion of DBRS in its press release that two-thirds of plans are underfunded by more than 20 per cent. In its introduction to this section, the DBRS study further contradicts its neo-liberal hysteria against defined-benefit plans stating, "The following tables show the volatility of funded status and how it is driven mainly by the economic factors of each period." If the funded status of defined-benefit pensions "is driven mainly by the economic factors of each period," how does eliminating them solve the problem of recurring economic crises? Neo-liberals target social programs because they want to transfer the collective wealth away from the working class and the most vulnerable in society to owners of monopoly capital. Their anti-social policies and practices aggravate the underlying economic contradictions that cause crises. Cuts to social programs and concessions extorted from the working class are not solutions!

The concern of the people and their social consciousness should concentrate on finding out why economic crises are recurring occurrences that cause hardship for all. This pro-social concern includes conscious participation in practical politics and acts to combat the recurring economic crises and find out their root cause so that a new direction for the economy can be found and implemented. Attacking social programs such as defined-benefit pensions, which are needed by all and should be guaranteed in a modern society, will not solve the country's economic problems but will only make the situation worse for the people and their socialized economy.

Part 2
Defend the Defined-Benefit Pensions Workers Have;
Fight for Defined Retirement Benefits for All

The DBRS neo-liberal story attacking defined-benefit pensions reinforces an anti-social direction for the economy that is no solution at all and destructive to the interests and rights of the working class. Modern society has the productive capacity to support defined benefits for all at a Canadian standard. The point for the working class is to organize and engage in practical politics to transform the necessity for defined pension benefits into reality.

The DBRS attacks on company and public defined-benefit pensions drag society backwards. From a supposedly detached perspective, DBRS describes what it sees as an inevitable shift away from defined pension benefits towards individual workers saving for their retirement resulting in pension benefits that are unpredictable and which possibly will completely run out.

DBRS writes, "Employees Will Be Increasingly Reliant on Their Personal Retirement Savings -- The shift in trends away from defined-benefit plans and the inadequacy of government social security benefits will force most employees to take responsibility for their own personal retirement planning."

The working class cannot accept this anti-social trend as inevitable. The attacks on defined benefits are not a trend at all but a well-organized and financed political and media offensive against workers' rights. The Workers' Opposition is determined to defend the defined-benefit pensions that exist and bring into being a pro-social alternative of defined-benefit pensions for all. The progressive trend of history is towards government guaranteed defined-benefit pensions for all funded by a corporate pension tax on all businesses according to the size of their gross income.

The Workers' Opposition is organizing its own practical politics and media campaign to defend the existing corporate defined-benefit pensions and not allow them to be undermined by neo-liberal politics. These company defined-benefit plans are a stepping stone towards universal government defined pension benefits for all at Canadian standards.

Part 3
Depriving Retirees of Their Right to a Claim on Revenue Is the Main Reason for the Attacks on Defined-Benefit Pensions

Big business wants to eliminate its defined-benefit pension funding contributions, which according to DBRS were $85 billion in the U.S. and Canada during 2011. The claim on company revenue to fund defined pension benefits is the target of assault. The big monopolies want the revenue, presently flowing into pensions, transferred into their general accounts to be used as they see fit rather than claimed to support retired workers at a modern standard. All the other chatter of funding obligations, pension plan solvency, demographics and whether companies should be in the "retirement business" is to divert attention from the monopolies' anti-social offensive to deny revenue for pension benefits and instead use it to pay the rich.

Defined-Benefit Pensions Are a Right in Modern Society

DBRS presents the claim on revenue to fund defined pension benefits as a negative factor in the economy. The Workers' Opposition disputes this assessment saying the aim of a modern economy is to allow all its members to live in dignity at a Canadian standard whether actively working, unable to work due to injury, illness or some other reason or retired. The aim of a modern economy cannot be to make certain individuals rich by exploiting the working class and hope that wealth will trickle down to others while charity sorts out social problems and the general needs of society. Such an anti-social aim is in contradiction with the socialized basis of a modern economy and the reality that people have rights by virtue of being human.

Owners of monopoly capital are the first to admit that their biggest priority is to defend and enlarge their personal wealth and empires, and to build a wall between themselves and social problems and the general interests of society. But this aim and priority to pay the rich is in contradiction with those on the other side of the wall who have rights by virtue of being human, which includes the right to a cultured dignified retirement with defined benefits.

DBRS searches for reasons to attack defined-benefit pensions and applauds their destruction. Prominent amongst its reasons are the periodic economic crises that grip the capitalist economy and the global inter-monopoly competition and empire-building within the imperialist system of states. Instead of tackling those problems head on to resolve them and move society forward in a new direction, neo-liberals retreat into an irrational destructive defence of the status quo. They declare crises and competitive global empire-building as unavoidable for which no alternative exists. To save their particular empires, class privilege and authority, they attack social programs and the claims of the working class including the right to defined pension benefits.

To camouflage the core reason for attacking defined-benefit pensions, which is to stop retired workers' claims on company revenue, DBRS has the gall to suggest that denying defined-benefit pension plans for new hires is somehow in the interest of the new generation of workers.

DBRS writes in the section, "Increased Strain on Sponsors and Employees Alike.... This shift to defined-contribution pension plans will also place less strain on the future workforce, as they currently must help subsidize existing defined-benefit pensioners should any shortfalls occur." For DBRS, active and retired workers' claims on company revenue are somehow a "strain" on the owners and workforce alike.

The wages of young and senior workers are legitimate claims on company revenue. This revenue exists because it has been generated by those same workers who stake a claim on what they have produced. According to the capital-centred logic of DBRS, workers' claims on revenue in the form of wages, benefits and pensions put a "strain" on both themselves and the company. To relieve the "strain," the neo-liberals demand concessions from the working class contending that with the elimination of the "strain" of workers' claims for wages, benefits and pensions the companies will be able to survive the periodic economic crises and engage fully in the global competition to build their respective empires. For the working class, the strain on revenue from the claims of owners of capital for higher and higher profits is damaging to the economy and workers and contrary to the public interest.

The Workers' Opposition declares that within the situation as it presents itself, equilibrium must be established based on recognition of the rights of the working class. Working class concessions are not solutions to the problems of economic crises, competitive global empire-building or any other problem within the socialized economy. Concessions create disequilibrium. A new direction for the economy and equilibrium based on recognition of the rights of the working class must be found and put into practice. This new direction and equilibrium are not found in the words of DBRS and its conciliation with the negation of the right of all to defined pension benefits. The Workers' Opposition dismisses the DBRS study with contempt.

Part 4
DBRS Starts from an Anti-Social Thesis and
Seeks Out Data to Prove It

DBRS begins from the anti-social thesis that companies cannot afford defined-benefit pension plans and governments will continue to refuse to legislate and guarantee universal defined pension benefits at living standards that workers acquired during their years of employment.

DBRS pushes its anti-social thesis by putting forth selected assumptions and data creating an atmosphere of doubt and even panic around the funding of defined-benefit pensions. To do this it uses jargon such as "total liabilities," "funded status," "total obligations annually," "widening gap between pension assets and obligations," "drop in discount rates" etc. These concepts are based on assumptions that can be manipulated to suggest a preconceived notion. It surrounds this jargon with evocative words that further manoeuvre the reader towards unwarranted conclusions.

For example, DBRS says employer contributions are "too high" making up "4% of total obligations annually." This information could be just as easily written a different way: employer contributions are too low making up only 4% of total obligations annually. Either way misrepresents the figures and leaves the reader no further ahead in grasping how the situation presents itself and what has to be done to ensure retired workers do not end up impoverished and finishing their lives without dignity.

Presenting assumptions and figures in a preconceived manner without context does not sort out the problems of a socialized economy providing for its people. This is similar to the global financial ratings agencies and governments throwing national and provincial deficits and debt at people and screaming in panic for austerity, demanding cuts to social programs, privatization, pay-the-rich schemes and working class concessions of lower wages, benefits and pensions.

DBRS presents itself as authoritative and unquestionable in economics. It uses capital-centred terminology embossed with emotion and alarm to prove its anti-social thesis that defined-benefit pensions are in crisis and have to be abandoned. From its study, look at one emotion packed explanation of pension obligations that leaves readers confused and uneasy, and if not careful, convinced that defined-benefit pensions have indeed entered the "danger zone" and are no longer possible:

"(4) Pension Obligations -- Increased Largely Due to a Drop in Interest Rates: Discount rates are a key variable in changes in pension obligations. They are calculated by taking the risk-free rate (based on 30-year government bonds) and adding a risk premium (90 basis points). As a result of the decline in interest rates, discount rates dropped by approximately 143 basis points over the past four years and pension obligations hit an all-time high in 2011, contributing significantly to the current pension deficit....

"Widening Gap between Pension Assets and Obligations: Pension obligations have risen significantly in the past year, due to low discount rates.... This combination of higher obligations and weaker asset growth has created a funding gap that rivals 2008 levels."

Wow, the sky really is falling Chicken Little! Low interest rates are causing the sky and discount rates to fall, as the risk-free rate plus the risk premium have collapsed resulting in pension obligations hitting an all-time high, widening the gap between weaker pension assets and obligations generating a funding gap that has plunged underfunded pension plans into the danger zone -- My heart is pounding Chicken Little; all I can do is scream!

The upshot behind all this hysteria is that the big monopolies do not want revenue going into pension funds and they do not want revenue directed towards paying defined pension benefits. They want to eliminate a social program that came into being because workers recognized a need, and organized and fought to meet that need with defined-benefit pensions. If governments at all levels instituted universal defined pension benefits for all at a Canadian standard, individual companies would be relieved of the direct chore of managing pension plans. Defined pension benefits would become a universal social program similar to universal health care funded through general public revenue. To sustain the universal pension program, enterprises would have to supply a pro-rated amount of revenue based on their gross income not on the number of retirees from their particular company. But monopolies are dead set against any use of company revenue for particular or general social programs and use their political power and monopoly right to thwart any such pro-social development. The working class has to organize its practical politics to deprive big business of its power to deprive the country of both particular and general social programs.

Aggregate Data for Defined-Benefit Plans

The following aggregate figures for Canada and the U.S. provided within the DBRS study show assets of defined-benefit pension funds and their liabilities from 2006 to 2011. The statistics also show benefits paid, contributions, funded status, net asset growth and discount rates from 2007 to 2011. The figures reveal problems but not a crisis requiring the elimination of a very positive social program that could be developed into government run universal defined pension benefits for all. One should also remember that these figures are aggregates while each defined-benefit plan has its own particularities that have to be investigated.

U.S. and Canadian Defined-Benefit Pension Plans in USD Millions (from DBRS study):

Total Assets
Total Liabilities

Benefits Paid
Funded Status
Net Asset Growth
Discount Rate

Assets fell in 2008 and subsequently increased back to the 2006 level by 2011. Benefits paid in 2011 are up by just over $5 billion to $111.342 billion. Liabilities fell from 2006 to 2008 and then began to grow. Since the 2008 crisis, assets and liabilities seem to be going in opposite directions. Even as assets improve, the funded status does not and even worsens in 2011 creating a "widening gap." Why is this so? The objective figures of actual money (assets, benefits paid and contributions) appear positive, especially given the turmoil caused by the 2008 economic crisis. The subjective figures based on actuarial assumptions (liabilities, funded status and discount rate) are conversely negative. Why that is and what the correlation between positive and negative figures may be, DBRS does not explain other than to place most of the blame on low interest rates. It would appear that an exaggeration of the liabilities and poor funded status plays into the attack on defined-benefit pensions and the anti-social thesis that they are "not possible or feasible."

DBRS says the following about liabilities: "These liabilities may fluctuate with pension benefits paid during the year and changes in underlying actuarial assumptions such as mortality rates, investment returns and discount rates, which cause volatility in pension obligations."

Assets fell in 2008 yet liabilities fell as well. Assets and contributions improved from 2009 to 2011, and benefits were stable yet liabilities grew. It appears that the other "actuarial assumptions" outweigh that of the actual assets and contributions when determining liabilities and funded status. In what appears a contradiction with the aggregate figures, DBRS writes, "During poor economic times, a low interest rate environment would exponentially increase obligations as assets typically plunge." Following the 2008 collapse, the economy continues to have low interest rates but total assets have recovered to reach the same level as 2006. However, based on actuarial assumptions, liabilities have grown significantly and the generalized funded status has degenerated.

No one should draw unwarranted conclusions from the data DBRS presents. It appears that they are meant to bolster an anti-social thesis that defined-benefit pensions must be destroyed. The Workers' Opposition disputes that anti-social thesis and asserts that universal defined pension benefits for all are the order of the day and well within the capacity of the modern productive economy. To reach that goal all existing defined-benefit pension plans should be fully protected and guaranteed through government intervention if necessary and not allowed to flounder under any circumstance including company bankruptcy protection intent on destroying or downgrading its own workers' defined-benefit plan. Public policy should be put into practice to guarantee universal defined pension benefits for all.

Concessions Are Not Solutions!
Defined-Benefit Pensions Are a Right!

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