After the financial crisis and market crash of 2008-09, employers and governments tried to use temporary pension deficits to fear-monger about pension sustainability. They hoped to scare our members into accepting permanent pension concessions. But CUPE members fought back, engaged at bargaining tables, and refused to accept that defined benefit pension plans were broken.
Less than a decade later, our members have been proven right. Recent good news from the pension world gives our members solid backing to not only push back against pension concessions, but also demand more retirement security at bargaining tables.
Let’s start with the Healthcare of Ontario Pension Plan (HOOPP). CUPE, through the Ontario Council of Hospital Unions (OCHU), plays a key role as a settlor and trustee of this major defined benefit plan. HOOPP has become one of Canada’s top-performing funds without investing in public-private partnerships.
The plan has over $70 billion in assets. It is funded at 122 per cent, meaning for every $1 of pension obligations the plan has made, it has $1.22 on hand. HOOPP had double-digit returns last year and has a 10-year annual average return of more than nine per cent.
The hard work of OCHU and its HOOPP trustees has ensured these investment returns benefit plan members. The plan has delivered on cost-of-living increases. All retirees have been paid for money lost to inflation over the last 15 years. HOOPP also recently announced a significant benefit improvement for active plan members, as well as increased survivor benefits. Over the past decade, HOOPP has been able to enrol almost 55,000 new part-time members in the plan.
It’s not only HOOPP that is doing well. Pension consulting firm Aon Hewitt recently reported that the median solvency funding ratio (a measure of a plan’s financial health that compares plan assets to liabilities) for Canadian plans it monitors is at its highest point since 2002. Aon reports that more than half the Canadian pension plans in its database are now fully funded. Rising interest rates and healthy stock returns have contributed to these improved funding ratios.
Backed by this good news, CUPE workers at the University of Prince Edward Island recently rejected the employer’s demands for a radical overhaul of their pension plan. CUPE locals worked with other unions on campus to negotiate a deal that preserves their defined benefit plan with no benefit reductions, and gives the unions an equal role in plan governance going forward.
CUPE workers across the country are right to question employer rhetoric about pensions. Canadian pension plans are doing well. Many have already fully recovered from the worst financial crisis the world has seen since the Great Depression. The numbers are on our side. CUPE members are well equipped to fight for more, and better, pension coverage for all workers.