Thursday March 12, 2009
For Immediate Release
Toronto, ON – “Canada needs a national pension insurance program to protect workers from the effects of corporate pension irresponsibility,” says Dave Ritchie, General Vice President of the International Association of Machinists and Aerospace Workers. The IAMAW is giving that message to the federal government in response to its consultation paper on private pension plans. The national consultations begin in Ottawa on Friday March 13, 2009 and continue across the country until mid-April.
The IAMAW submission calls for the federal government to set up an insurance fund, as is available in Ontario, the U.S. and many other countries, to top up pension funds when the plan sponsor fails. It also calls on the federal government to amend pension legislation to make solvent employers in the federal jurisdiction responsible to top up terminated, but underfunded pension plans. This is required in almost all other Canadian jurisdictions.
The IAMAW also calls for a number of other legislative changes to increase pension security, including restrictions on employers’ use of surplus for contribution holidays.
“In the current environment, many Canadian workers and retirees are concerned that the pension benefits that were negotiated will not be there when they need them, as corporate executives have put their own interests before those of pensioners,” explained Ritchie.
As an example, Air Canada received a special authorization to defer its required pension contributions while under creditor protection in 2004. As soon as it exited creditor protection, Air Canada management moved to dismantle the airline, selling off assets, and removing over $2 billion for distribution to investors and management. All the while, they continued to underfund the pension plan.
“Now, with the company in a precarious financial condition, and its pension seriously underfunded, Air Canada employees and pensioners face an uncertain future,” said Ritchie. “The federal regulator should have acted to the extraction of profits at the expense of pensions. The changes proposed by the IAMAW would help protect the benefits that workers have negotiated and earned.”