The Manitoba Government’s proposal to introduce a shared-risk target-benefit pension plan model in Manitoba raises concerns.
“The Pallister government’s pension plan review has the potential to substantially change the way pension plans are funded and managed, and could undermine the retirement plans of thousands of Manitoba workers and retirees,” said Matt McLean, CUPE National Researcher.
The government’s Consultation Paper released January 10th raises the question that employers could be permitted to retroactively convert already-made defined benefit promises to workers and retirees into insecure target-benefit or shared-risk plans where benefits could be legally reduced without limit. It should be noted that the Pension Commission report that accompanied the Consultation Paper specifically recommends allowing target-benefit or shared-risk plans only on a go-forward basis.
“CUPE would not support pension changes which would allow retroactive conversions because they break a deal between workers, retirees, and their employers,” said McLean. “That the Consultation Paper even asks Manitobans to consider whether employers should be allowed to break a pension promise with workers and retirees is offensive to Manitobans who work their entire lives and expect a fair and predictable retirement.”
A defined-benefit pension provides a guaranteed income to retirees, while target-benefit and shared-risk pension funds, by design, allow for pension incomes received by workers and retirees to be reduced.
Target-benefit and shared-risk plans, by definition, make no promise to workers and retirees.
“All Manitobans deserve a good pension plan, but pension plans are complicated, and the government is taking advantage of a complicated system to mislead current and future retirees into believing these changes will improve access to good pension plans for Manitobans,” said Terry Egan, President of CUPE Manitoba. “Manitobans should be deeply concerned about the road this Consultation Paper is trying to lead us down.”
CUPE Manitoba will be providing a submission in response to the provincial government’s Consultation Paper, highlighting concerns with the direction the government is proposing.
“Our union has extensive national experience with target-benefit plans. We know where and how they work best,” concludes Egan. “Unfortunately, we also know how they can be used to rob workers of their already-earned dignity in retirement. Most importantly, the government should not be opening the prospect of retroactive conversions.”