Target Pension Plans

The Trudeau government has introduced Bill C27, a scheme that would undermine the security of pension plans for Canadians, including those who are already retired.

BCRTA is fighting for the security of our members’ pensions, and for all retired Canadians.

Here is what you need to know:

 

Target Pension Plans – MPs

Contact Your MP

To assist you in working with other BCRTA members to contact your local MP, we have prepared a list of BCRTA branch contacts, cross-referenced with local MP information.

To access this information, please view the PDF document.

Sample Letter Re Target Pension Plans

Sample letter to MP – short form

 

 

Date

 

Mr./Mrs./Ms./Miss Firstname A. Lastname, M.P. for ________________________

House of Commons

Ottawa, Ontario  K1A 0A6

 

Dear Mr./Mrs./Ms./Miss:

 

I am writing, as a member of the constituency of __________________, to express my opposition to the government’s Bill C-27 An Act to Amend the  Pension Benefits Standards Act.   I ask that you seek the withdrawal of this bill now.

 

I am concerned that this legislation would encourage employers to pressure their employees and retirees to surrender their defined benefit plans in favour of target benefit plans, thus leaving hundreds of thousands of Canadians facing income insecurity in their retirement.

 

I would encourage parliament, both government and opposition, to focus its energies on creating a legislative and economic environment in which defined benefit pension plans can thrive and expand.

 

Thank you for your attention to this important matter.  I look forward to your timely reply.

 

Sincerely,

[FULL NAME]

[FULL ADDRESS]

Bill C27 Backgrounder

There is “a sacred trust” for Government to protect citizens who have earned pensions as compensation for services rendered during their working lives. The promise made by Justin Trudeau just before the 2015 federal election states: “DBPs [defined-benefit pensions], which have already been paid for by employees and pensioners, should not retroactively be changed into TBPs [target benefit pensions].”

Yet, on October 29, 2016, just a year after their election, without any press release, with no advance notice to unions or pension plan members or retirees – with no prior public consultation – the Liberal Government introduced Bill C-27.


Bill C-27 seeks to amend the Pension Benefits Standards Act of 1985. It signifies the first time a strategy has been articulated whereby vested guaranteed pension benefits can legally be converted to non-guaranteed, conditional pension benefits. It introduces a target benefit plan framework in Canada’s pension landscape, and it allows for secure defined benefits plans to convert to target benefit plans, where all the risks are transferred to plan members. Most of the language of this legislation is centred on enabling that conversion.


In plans such as the BC Teachers’ Pension Plan, which is an example of a defined benefit plan, both members and employers assume the risk and make contributions from time to time to guarantee pension amounts at the end of a member’s lifetime. The result is a large pooled amount of money, held for a long time, on which investments can be made. The returns pay for about 80% of the pensions.


Defined benefit plans constitute one of the strongest retirement income systems. They guarantee retirement security to their members, which contributes to national prosperity; the pension income cycles back to the economy through consumer spending and taxes, which, in turn, generate growth and employment; defined benefit plan retirees are less likely to rely on government assistance, such as the Guaranteed Income Supplement (GIS); and solid retirement income brings better health status and outcomes, reducing demands on the health system and inspiring volunteerism.


Target benefit plans, on the other hand, aim for a level of benefits but do not guarantee that level. Based on a percentage of a person’s salary and market performance, the expected benefits are a target, not a promise. In difficult financial times, target benefits can be reduced, which means less retirement security for plan members. Employers are NOT obliged to make contributions to guarantee benefits. Instead plan members (contributors) and former plan members (retirees) are left with the risks: it is they who bear the brunt of missed targets— in the form of reduced or clawed-back pensions. The risk in target benefit plans is shifted from employers and plan sponsors to employees and retirees.


Proponents of Bill C-27 contend that the establishment of target benefit pension plans, will “make retirement more secure” for some Canadians. Indeed, target benefit pension plans are better than defined contribution plans or no plan at all, but they are far worse than defined benefit pension plans.


Bill C-27 has provisions that legally permit employers to establish target benefits plans and to walk away retroactively from the pension promises they have already made to workers in defined benefit plans. The bill allows for pensions that have already been earned by Canadians, including Canadian senior retirees, to be changed retroactively.


C-27 would allow for target benefit plans to be initiated by federally-regulated employers and Crown corporations. Accordingly, we may feel safe because the legislation apparently does not touch us. But if Government presents the target benefit plan as a model for federal employees, won’t employers and plan sponsors in other national and provincial jurisdictions be tempted to convert to target benefit plans as well?


Employers, in fact, can reap huge advantages if defined benefit plan members can be persuaded to “surrender” their benefits; and, as such, target benefit plans are irresistible to employers with defined benefit plans: they can walk away from pension promises already made to employees and retirees if they can persuade members of secure defined benefit plans to convert to the riskier target benefit plan. They can present perks: work place training, promotions, salary raises, improved benefit packages. They can also make threats: job losses, reduced hours of work, reduced investment, fewer opportunities for promotion, scaled back benefits, lockouts, restructuring, or bankruptcy.


Much emphasis in Bill C-27 is placed on “individual” consent, and those who see no danger in the proposed legislation state that in order for an individual to convert to a target benefit plan, “informed consent” must be given. Furthermore, surrendering benefits from an existing defined benefit plan to a target benefit plan is optional. In other words, they say Bill C-27 is no threat: an individual can remain in a defined benefit plan if so wished. As mentioned, however, both “carrots and sticks” can be used to persuade members to surrender their secure pension benefits. These pressures may convince some employees to sacrifice their long-term financial security – their future pension – for a short-term gain.


Retirees often do not have a deep understanding of pension plans. When approached, they may be vulnerable to pressure, helpless before a persuasive plan sponsor, and they may be convinced that surrender of their rights will benefit current workers and contribute to the greater good. Furthermore, retirees do not have a union to provide protection; and even so, in Bill C-27, the role of unions in the “informed individual consent” process for converting from a defined benefit plan to a target benefit plan is ambiguous


In case of conversion, the viability of the remaining defined benefit plan will be at risk. If a large number of members are persuaded to switch to a TB plan, then the source of funding to correct a shortfall for those remaining, including the retirees in the defined benefit plan, will be inadequate to meet the pension promise. Their pension will be reduced.


The word “surrender” is used more than a dozen times in Bill C-27, underscoring the intention of Bill C-27 – the conversion of guaranteed defined benefit plans to risky target benefit plans.

 

As it currently stands, Bill C-27 threatens to erode the retirement security of millions of Canadians.

Learn more about how you can take action.

 

[1] A letter to Gary Oberg, Head of the Federal Superannuates ‎National Association (the National Association of Federal Retirees), July 23, 2015

[2] Tiede, Gerry. “Defined benefit pensions under attack again”. PostScript. Vol 21. Issue 1. Spring 2017. P 7

[3] https://www.federalretirees.ca/…/Federal-Retirees-priorities-for-the-2017-federal-budget.

 

[4] “Contributions are made by a member and the employer. The money is invested in an individual account with high investment costs. The member bears all the risks.”

Bill C27

WHO’S THE TARGET? YOU ARE.
Bill C-27:
Contacting your MP Campaign

Goal

 

The BCRTA believes that Bill C-27 is a threat to all defined benefit pension plans in our country. While this bill affects only federally administrated pension plans, if passed it will form a foothold to start weakening all provincially regulated pension plans. All companies and governments have an interest in reducing their responsibility for pension plans, and this bill does that by unfairly shifting the risk of future underfunding from the employer to the employee and retiree.

Responsible and sustainable pension plans like the BC Teachers’ Pension plan currently have a truly shared risk model – both employers and employees contribute to any shortfall so that the earned pension benefits can be guaranteed. Anything less than a guaranteed pension plan threatens the employee with a reduced standard of living and possible poverty during the later years of life.

Strategy

We understand that 25 personal contacts by constituents to a Member of Parliament is enough to get the Member’s attention and initiate discussion within caucus and action on an issue.  We would like to reach each BC Member of Parliament with 25 contacts so we are reaching out to you. So that you can speak knowledgeably and confidently on the issue, we are providing background information and assistance.

The most effective interaction is a personal visit to your MP. The list of MPs and their constituency offices is provided in this package. Please do make an appointment to see your MP or take advantage of one of their public appearances. MPs often have ‘Meet your MP’ events. Read through the Backgrounder and make a few notes of the main issues you want to make.  It is better to have you own notes than to give the MP our prepared information. Your personal views pack more punch than getting another copy of a form letter from a lobby group.

It may be easier to make a contact with your MP by phone and we encourage that. Prepare the same way.

It is quite likely that your MP will know less about this issue than you do if you have prepared for the conversation. MPs have many different issues on their agenda and they can’t know deeply about all of them. So you may need to educate your MP as well as explain your concern.

An MP who is knowledgeable about this issue may attempt to ease your concern by saying that the bill covers only federally regulated pension plans – ours in provincially regulated – and that members can only surrender their current pension rights through their informed consent. Neither of these responses should give us any comfort.  We believe that if this Bill passes there will be huge pressures on all defined benefit plans to convert to TB plans because corporations and governments can get out of their future responsibilities with this plan.

Informed consent sounds reassuring but given that the Bill allows employers to use carrots and sticks to push employees to sacrifice their Defined Benefit plans for a Target Benefit plan it is still worrisome. Carrots might be salary increases or job promotions.  Sticks might include threats of job losses or company bankruptcy. These pressures may convince some employees to sacrifice their long-term financial security – their future pension – for a short-term gain. When you first began teaching, did you value your pension as much as you do now?

A third option is writing a letter to your MP. This is much less effective because letters are often read by staff – not by the MP – and you will get a standard, “Thank you for writing” response.  Form letters are the least effective. If letter writing is the only way you can participate, please do that as every voice can add to the effort. We have included two sample letters – a short one and a longer one – as a guide to how you might write your MP.  We would encourage you to use these letters as a model and make changes so that each letter is unique. An old-fashioned, handwritten letter is the most effective because it shows that you care about the issue enough to spend the time communicating your concerns. Remember that letters mailed in Canada to your MP do not require a stamp.

Last step

Please share your experience with us so we can track our campaign and ensure that each BC MP receives at least 25 comments urging the defeat of this bill.  You can copy, complete and paste this form in an email and send it to Laurie at the BCRTA office.

See a sample letter

Send to Laurie@bcrta.com

 

Your name:

Your MP’s name:

Date of contact:

Type of contact:  Personal visit, phone call, letter sent

Any response?

Your Pensions Targeted

BCRTA Social Concerns Committee Report
By Lynne Rodier, Social Concerns Committee Chairperson, McLeese Lake, BC

The major focus of the June 20th meeting of the Social Concerns Committee was to develop a strategy for protesting Bill-C 27. The Bill, if passed, allows Defined Benefit plans to potentially be converted to Target Pension Plans. As it currently stands, Bill C-27 has the potential to erode retirement security for millions of middle class Canadians who have Defined Benefit plan coverage and those who have accrued or earned Defined Benefit pension plans. JoAnn Lauber led the Social Concerns Committee (along with the Pensions Committee who joined us) to develop an action plan which includes telephone calls and letter writing. An Ad Hoc committee was formed as a result of the meeting and the social contacts networks will be asked to share information with the Branches. The committee encourages members to use a link provided by The Public Service Alliance of Canada which allows for a quick protest of the Bill—but hand-written letters are also encouraged.

http://e-activist.com/ea-action/action?ea.client.id=68&ea.campaign.id=60063

Also, at the June meeting, the merger of Social Concerns and Health and Housing Committees into a Wellbeing Committee was discussed. The draft responsibilities were reviewed and approved by the committee. The committee wishes the new committee well.

The committee wishes to thank JoAnn Lauber for all of her help and expertise with meeting its objectives, especially the one of promoting the “Declaration Concerning A National Health Care Strategy—For Seniors” developed by the Vancouver Round-table chaired by Pat Brady.