Defined benefit pension plans provide the highest level of retirement income security for Canadian workers. Canada’s largest public sector union says attacking these plans with faulty claims they are ‘unaffordable,’ is short-sighted and doesn’t help address the real problems of Canadians prepare for retirement.
“More than 11 million workers without a workplace pension plan is the real crisis in Canada,” says Paul Moist, national president on the Canadian Union of Public Employees, responding to a recent report on public sector pensions from the Canadian Federation of Independent Businesses.
“The global financial crisis did leave many defined benefit pension plans with ground to make up, but they are recovering across the country,” says Moist. “Abandoning them because of temporary and surmountable funding challenges is short-sighted and irresponsible.”
Ironically, the CFIB report clearly illustrates how inadequate defined contribution plans are for Canadian workers compared to efficient and secure defined benefit plans.
“Workers have fought and defended defined benefit plans for good reason - with risk-pooling and economies of scale, defined benefit plans mean workers can have a high level of retirement security at an affordable cost,” says Moist. “Advocating for all Canadian workers to be relegated to inadequate defined contribution plans is a bizarre concept of ‘fairness’.”
An average CUPE member with a workplace pension plan receives less than $18,000 annually, after a 30-year career and pension contributions – many receive much less. These are far from the ‘gold plated’ plans portrayed by the CFIB. While attacking these fair and decent pensions, the CFIB offers no solutions to Canadians without any workplace pension.
“The real problem is the 6-in-10 of Canadian workers not participating in workplace pension plans, and the more than 75 per cent who are not contributing to ineffective RRSPs,” says Moist. “We would be better served by concentrating on improving the retirement prospects of these Canadians, and ensure a decent and secure retirement for all workers – whether they work in the public sector or for an independent business.”
CUPE and the labour movement continue to campaign for an expansion of the Canada Pension Plan. Through gradual increases to worker and employer contributions, CPP benefits could be doubled. This plan benefits virtually all Canadian workers: private sector, public sector, union and non-union.
“There are no winners in the race for the bottom of pensions,” says Moist. “Instead of attacking aspects of our pension system that are working effectively, we must concentrate on bringing much needed retirement security to the 11-million Canadians who need it most.”