25, 2014 - No. 19
Alberta's Public Sector Pensions!
Defend the Pensions We Have! Fight for Pensions for All!
• Step Up Resistance to
Attacks on Pensions - Peggy Morton
• Denounce Redford
Regime's Campaign Against Pensions
• No to PC and Wildrose
Wrecking of Pension Plans - Rita Soto
• Labour Coalition on
Pensions Responds to Auditor-General's Report
• Key Quotes from Auditor-General's Report -
• Funding Status of Pension
Plans in 2013
• Canadian Taxpayers
Federation Plays Chicken Little with the People's Pensions
• Rally for Retirement
Hands Off Alberta's Public Sector
Defend the Pensions We Have! Fight for Pensions for All!
Step Up Resistance to Attacks on Pensions
Security in retirement including pensions and
modern and humane seniors' care is a right that belongs to all people.
The attack on public sector pensions is part of the neo-liberal assault
aimed at dragging all Canadians down instead of raising everyone up to
defined-benefit pensions for all and guaranteed security
Alberta's public sector pension plans, including
the Local Authorities Pension Plan and the Public Service Pension Plan,
cover more than 300,000 active and retired workers. The Redford
government has announced changes to the public sector plans that would
reduce benefits and threaten their sustainability. Workers
and their collectives have immediately responded to defend the pensions
they have by mobilizing themselves in actions right across the
province. Town hall meetings have been taking place everywhere; a
website called www.truthaboutalbertapensions.ca has been established to
provide information; rallies are organized;
thousands of letters have been sent to MLAs telling them to keep their
hands off public sector workers' pensions; and workers are taking every
opportunity to tell their MLAs that the proposed anti-pension
legislation must be scrapped at once.
The Labour Coalition on Pensions has organized a
rally in Edmonton for March 2 at 2:00 pm. Workers are coming from
Calgary, Red Deer and Ft. McMurray as well as other cities and towns.
Another rally is also planned for the following day at 4:00 pm, the day
the spring session of the Legislature opens.
The announced government changes severely
undermine the existing public sector defined-benefit pensions, threaten
their future viability and cast a dark cloud over all pensions. The
retrogressive changes are a direct attack on public sector workers and
their Canadian standard of living, and an indirect attack on
the right of all to defined-benefit pensions.
Public sector workers receive pensions in exchange
for the important work and service they provide Canadians and the value
they add to the economy and society. The government changes are part of
the transfer of wealth away from social programs and the working class
and even out of the economy altogether
to concentrate wealth and power in the hands of the energy and other
The rich and their ruling elite heap scorn on retirees
as a cost to society to justify looting workers' pensions and to deny
the right of all to security in retirement. The
mobilization to stop the Redford government's proposed legislation
shows that workers have rejected the anti-pension hysteria and are
forward their own pro-social agenda.
The Workers' Opposition fights for a pro-social
solution to pensions, which is to defend and strengthen the
defined-benefit pensions workers have and extend them to all to
guarantee the right to security and dignified living conditions in
retirement. This requires raising everyone up to government guaranteed
defined-benefit pensions at a standard of living attained during their
This attack on the right to pensions is yet
another relic from an earlier period of aristocratic class privilege
that must be abolished from our thinking and social practice. The
Workers' Opposition upholds the principle that the aim of a modern
economy is to ensure that the actual producers participate in all
of economic and political life according to their ability, and in
exchange for their work live in dignity from birth to passing away.
Security in retirement includes defined pensions
and modern seniors' homes and care facilities as a right. To defend the
pensions we have and fight for defined-benefit pensions for all
requires that defined pensions must become a universal social program
similar to universal health care delivered by government
and funded in exchange for the value workers bring to the socialized
economy and produce during their working lives. Canadians defend with
passion the universal public health care they have and fight for its
expansion. So too Canadians defend the defined benefit pensions they
have and fight for pensions and security
in retirement for all.
Pensions for All!
Hands off Public Sector Pensions!
Denounce Redford Regime's Campaign
The attack on public sector pensions is
just at those particular pensions but at the right of all to pensions
at a Canadian standard. To destroy or even weaken public sector
defined-benefit pensions creates an atmosphere where all
defined-benefit pensions are meant to appear as a utopian
dream. This cannot pass!
The pension plan changes announced by Alberta
Finance Minister Doug Horner imposing a two-tier pension system amongst
other retrogressive measures would take effect in 2016 and affect all
future service. Contribution rates of workers and employers will be
capped, which will eventually weaken the pensions
to the point of collapse. Workers will have to work longer before they
can retire. They will no longer be able to retire with a full pension
when combined years of service and age reach 85. Anyone retiring before
the age of 65 will lose a much larger proportion of their pension for
each year under 65. All future service
will be capped so that the cost of living allowance (COLA) is targeted
at 50 per cent and even that is conditional on the plan's funding
instead of the existing guaranteed 60 per cent COLA. Workers will no
longer stop paying into the fund once they surpass 35 years of service.
With the attack on public sector pensions in
Alberta and at the federal level, the Redford and Harper governments
want to stop any pro-social movement towards defined-benefit pensions
for all, especially through modernizing and strengthening the Canada
Pension Plan. The Workers' Opposition is determined
to turn the momentum around in favour of the people and a pro-social
No to PC and Wildrose Wrecking of Pension
Public sector workers and their collectives are
organizing militant resistance to the attacks on their right to live in
security and dignity in retirement. In response, the PCs and Wildrose
are trying to cover up where they are headed with regard to pensions
and in this way try to break the solidarity
of active and retired workers. The political parties representing the
energy and other monopolies want workers to adopt the anti-social
thinking of the owners of capital, which is narrowly fixated on growing
their own wealth and power, and to turn their backs on the broad
pro-social thinking and outlook
of the modern working class. The modern working class outlook cares
deeply about social solidarity, defence of the public interest, and
solving problems facing the society.
Both the PCs and Wildrose aim to break the
solidarity of workers and their unions extending across generations.
The anti-social outlook demands each individual worker should look at
the pension issue from the standpoint of "what's in it for me." In
opposition, the modern outlook upholds the
view that our security lies in the fight for the rights of all.
The PC government claims that even with its
proposed retrogressive changes to their pensions, pensioners as well as
workers who are close to retirement have nothing to worry about,
because their pensions are guaranteed. It suggests that the defence of
pensions is not their fight, as it mostly
affects future generations, about which they should not be concerned.
This is pure deception. Without social solidarity
across the generations, the working class and modern economy are weak
prey for the rich predators. The essence of the government's proposals
is to wreck the pension plans of all workers one retrogressive step at
a time, hitting the youth and elderly
with different levels of intensity to cause splits in their resistance.
The Pension Coalition points out, "The
government's proposed plan cannot still be called a defined-benefit
plan. The Plan benefit levels cannot be guaranteed, given that
contribution rates are capped." If this plan is adopted, no public
sector worker, active or retired can be assured of security
and dignity in their retirement years.
Wildrose is playing coy, telling public sector
workers, "The Wildrose supports sustainable pension plans and
recognizes, as do the vast majority of provincial and municipal
employees, that there may need to be some tweaks to what is offered
future workers by way of pension benefits."
Wildrose uses the same playbook as the Harper
government, using words to hide rather than explain where they are
going. Contrast the above "mildRose" statement with the Wildrose
"Budget 2013 Financial Recovery Plan" where it speaks like Chicken
Little claiming the pension sky is falling.
Wildrose writes, "The reason why there are so few
defined benefit plans in the private sector is because they are
unsustainable with no flexibility to adjust to volatile market activity
and a changing workforce. Unfortunately, the PC government has yet to
learn this lesson which has resulted in
Alberta now holding over $10 billion in unfunded pension liability
across the public sector."
Chicken Little Wildrose calls for the destruction
of defined-benefit pensions saying, "If the issue is not addressed
early enough, major corporations and even national governments face
financial ruin as more and more people turn 65 and start drawing from
their defined benefit pensions."
Similar to the Redford government attacks on
pensions, which is destroying them as defined-benefit pensions,
Wildrose proposes, "New hires will be provided with defined
contribution pension plans instead of defined benefit plans."
A defined contribution plan is a savings plan with
no certainty of a pension from retirement until passing away. Wildrose
and the PCs present the "I'm alright Jack" outlook as a means to attack
the rights of all. Never mind about the next generation, they say.
Forget about social solidarity and
the seniors' responsibilities to the next generation and the youth's
responsibilities to their elders.
A two-tier pension plan is designed to wreck the
plan over time for all workers. Consider what would happen if all new
workers were enrolled in a savings plan, not a defined-benefit pension
plan. The "old" plan would have no new entrants. The ratio of
retired workers in relation to active workers
would continue to grow, while the plan would have no new funding to
sustain it. Far from preventing a crisis in the plan's sustainability,
such a move would guarantee a crisis. Further, as more and more public
sector workers are not part of the same pension plan as the retirees,
what stake would they
have in defending it, especially when they are constantly bombarded
with anti-social propaganda?
Social and union solidarity extends across
generations, where all retired and active workers fight for the present
and the future, for the well-being of all generations. Security and
dignity in retirement is a right that belongs to all workers. Young and
old, we are all one working class.
Fight for Pensions for All!
Labour Coalition on Pensions Responds to
must scrap its pension
The Labour Coalition on Pensions has analyzed the
report of the Alberta Auditor-General released February 13, and
concludes that the report supports the argument that proposed changes
to the plan are ill-advised. In fact, the Auditor-General writes, "[It
is] unclear whether the proposed reforms significantly increase the
likelihood of the plans' sustainability."
The Labour Coalition on Pensions issued a
statement highlighting the following points made by the Auditor-General:
The Government of Alberta has not properly engaged
plan stakeholders - the employees and employers who pay for the plans;
The government has not fully considered effects of
the changes they are pushing through;
The government has not planned how any changes
would actually be implemented;
The "hard cap" on pension contributions proposed
by the government can in fact harm the plans' sustainability.
One proposed change to the pension legislation is
to impose a "hard cap" on contributions. This means that the pension
boards will not have the authority to set the pension contribution
level based on what is required to keep the plans healthy and
sustainable. The unions point out that this could well force the
pension boards to cut pension benefits to retirees.
Further, the changes the government intends to
impose will make pensions less attractive for part-time workers already
struggling to make ends meet on less than full-time hours. Workers who
will have to pay more for reduced pension benefits may well decide they
cannot afford to participate in the pension plans.
The people should question why the government is
engaged in pushing through changes to the pension plans, which are
supported by neither the pension boards nor the unions that represent
plan members. All the facts point to the conclusion that the government
is intent not on stabilizing the pension plans but
in wrecking them. This attack on the pensions of public sector workers
has as its aim to drag all Canadians down to a level without
defined-benefit pensions instead of raising everyone up to security in
Key Quotes from Auditor-General's Report
The Labour Coalition on Pensions backgrounder
provides key quotes from the report of Alberta's Auditor-General
concerning changes the Redford government intends to introduce as
legislation in the spring session of the legislature, which begins
- "It is therefore unclear whether the proposed
reforms significantly increase the likelihood of the plans'
sustainability." (Page 31)
- "If the defined benefit plans were changed to
defined contribution plans, it would be more likely that employers
would have to pay a much larger share of the current unfunded
liabilities than they are currently paying under the existing joint
funding model." (Page 17)
- "The financial health and design of Alberta's
public-sector pension plans can affect the government's and other plan
employers' ability to cost effectively deliver public services, attract
and retain quality employees and provide a level of benefit security
for plan members." (Page 18)
- "In September 2013 the government announced that
it planned to put caps on the contribution rates. This is an example of
a threshold that could be used to achieve clarity. However, the
department also needs to ensure the plans to determine how these
contribution rate caps will align with other plan attributes.
For example, the plans will need to determine how these caps align with
the objective of benefit security and investment policy." (Page 25)
- "One of the objectives was to ensure there was
intergenerational fairness for members and taxpayers; however, we did
not see how the analysis compared options considered against this
principle." (Page 31)
- "The department's comparative analysis of
proposed changes did not include feedback from stakeholders." (Page 31)
- "The department has not assessed the impact of
the proposed plan changes on employee recruitment and retention." (Page
Funding Status of Pension Plans in 2013
A study of 461 pension plans in Canada, the U.S.,
Japan and Europe by ratings agency DBRS found the average funding level
in 2012 had fallen to 78 per cent. DBRS considers funding levels under
80 per cent represent "a danger zone."
At the end of 2013, agencies described a very
different picture. AON Hewitt, a global human resources consultancy,
reported that the median solvency funded ratio in the AON Hewitt
pension universe of 275 public, semi-public and private plans rose to
93.4 per cent on December 31, 2013. That
figure represented a 5.7 percentage point improvement from September
and was up nearly 25 percentage points from the beginning of 2013.
The Mercer Pension Health Index, which tracks the
funded status of a hypothetical defined benefit pension plan, stood at
106 per cent on December 31, 2013 up from 82 per cent at the start of
the year and at its highest level since June 2001. AON Hewitt's
solvency funded ratio measures the
financial health of a defined benefit pension plan by comparing the
amount of assets to total pension liabilities in the event of a plan
Almost 40 per cent of pension plans tracked by
Mercer are now considered fully funded, compared to 6 per cent at the
beginning of 2012. Only 6 per cent of plans are now less than 80 per
cent funded, while at the beginning of 2013, 60 per cent were less than
80 per cent funded.
The studies show that the funding status of
pension plans can fluctuate wildly from year to year based on interest
rates and projections for investment returns.
Canadian Taxpayers Federation Plays Chicken
Little with the People's Pensions
The neo-liberal Harper front group the Canadian
Taxpayers Federation (CFI) and other anti-think tanks of the rich keep
on screaming that the sky is falling and disaster imminent unless
workers are deprived of their defined-benefit pensions and forced to
fend for themselves.
The anti-worker CFI leads the charge attacking the
pensions of Alberta public sector workers stating, "[Alberta Finance
Minister] Horner has decided that the province can no longer wait to
tackle its insufficiently funded employee pension plans. Beset by
people living longer, a lower ratio of
contributors to recipients, and returns on investments that have not
met expectations, the government's employee pension plans are now
bleeding money with a $10.8 billion unfunded liability. In short, there
is not enough money in these plans to meet their obligations.
"Union bosses claim that the financial hole in
these pension plans will disappear within nine years without any
changes at all to contribution rates or payouts. This is difficult to
fathom, with government projections showing the unfunded liabilities
continuing to increase in the next two years to
Contrary to CFI disinformation, the unfunded
liability is amortized over a maximum 15 years, as required by law.
Under current legislation, plan contribution rates can be adjusted to
deal with any liability or surplus. Employees and employers contribute
to the plan. Rate increases have been
in place for some time and the level of the unfunded liability is
decreasing. The Redford plan to cap rates, if implemented, could lead
to problems for the pension funds, which would play into the CFI
Chicken Little routine.
The CFI also makes a false claim that
"there is not enough money in the plan to meet their obligations,"
suggesting that the plan is about to fail and will not be able to
provide pensions. The calculation of the "unfunded liability" is based
on a process known as a solvency valuation, which is a test based on
the hypothetical situation that the plan is terminated on a certain
date and all plan members are paid what would be fully owed to them to
that point. The most common reason for such an occurrence is bankruptcy
and destruction of the employer and firing of all workers, which in
this case would be the Alberta government. What the CFI is trying to
cover up is that based on a going concern valuation, which assumes the
continuation of the plan with continued contributions of all plan
members, the pension plan is estimated to have enough assets to pay
future pension benefits.
The CFI covers up the negative impact on public
sector pensions from the neo-liberal agenda of privatization and
wrecking of public services, which it champions. Privatization of
government services and deliberate staffing policies to deprive workers
from becoming members of the pension plans
through the use of contract work, casual and temporary jobs and low
full-time equivalency part-time work, which is not pension eligible,
have resulted in fewer active workers in the plans.
Alberta's population is growing at the highest
rate of any province in Canada, and has increased by 50 per cent since
1992. This should have meant a healthy increase in public sector
workers in relation to retirees. The ratio of active to retired members
would be very different from what it now
is if the CFI supported anti-social agenda had not ravaged the public
service. Stopping and reversing this anti-social trend would have a
very positive impact on the economy, including the status of public
sector pension plans.
The CFI and similar anti-social agencies represent
private global monopoly interests. They attack public sector pensions
as part of an agenda to attack pensions for all. According to these
neo-liberals, people are not born to society and are not in a positive
relationship with it.
Contrary to the ravings of the CFI, the working
class makes society and the socialized economy function. The existence
of society and the socialized economy, on which the rich depend for
their earthly paradise, requires the work of the working class. The
working class works and guarantees the
existence of society and the economy, and in return, the society and
economy guarantee the well-being and security of workers from birth to
Not so, say the neo-liberals, who declare that the
relationship is wholly one-sided, and society and the economy have no
obligation or responsibility to guarantee the well-being and security
of the working class. In their narrow outlook, the economy and society
exist only to serve the rich and their
claims, and the claims of the working class must be sacrificed for the
benefit of the owners of capital.
The neo-liberals present security in retirement as
an individual's responsibility through "savings" during their working
years. If the savings fail to materialize for whatever reason, such as
injury or illness, or turn to dust through the latest fraud and
corruption and periodic economic crisis, this is
no concern to the champions of the rich. After all, according to those
whose heads are stuck in the medieval era, you are not born to society
so let your feudal extended family or charity look after you.
Canadians cannot fend for themselves in an economy
that is socialized in its essence, least of all in their senior years.
Canadians produce and live collectively. Collective problems require
collective solutions. CFI and their ilk represent the old, which is
blocking Canadians from providing a new direction for the economy,
solving the problems confronting society and moving it into the
twenty-first century not backwards to the fifteenth.
The neo-liberals want to convince everyone that no
alternative to wrecking and austerity is possible because a pro-social
alternative does not favour owners of capital and private monopoly
interests. The Workers' Opposition in contrast fights for a new
direction based on affirming the rights of
all and within this conscious fight for the new, the workers themselves
are fashioning a pro-social agenda in which security in retirement is a
Rally for Retirement Security!
Sunday, March 2 -- 2:00 pm
Churchill Square (99
Street and 102 Avenue)
The organizers state: "The Redford Government has
proposed costly and irresponsible changes to your pension plan. Make
your voice heard 2 p.m. on March 2 in Sir Winston Churchill Square.
"The Redford government's proposed cuts to
public-sector pensions are unjustified, unfair and reckless. Let's
For more information: www.truthaboutalbertapensions.ca
Also note the following related events:
Pension Rally at Opening of Alberta Legislature
Monday, March 3 -- 4:00 pm
Rally at the Legislature on the opening of the spring sitting of the
Legislature and the Throne Speech.
Worksite Day of Action
Thursday, March 20
Information walks over the lunch period at worksites, MLAs' offices or