OPSEU pushed back and got an agreement
OPSEU has maintained control of our public sector pension plans. We prevented the Ontario Liberals from using the pension assets of our members who work in the colleges, hospitals and in the Ontario Public Service to create a “pensions superfund”. This “superfund” would have put our retirement savings into the hands of government money managers. We should all be proud of the pressure we put on the Ontario government, which resulted in this major victory.
The level of contributions that members are currently paying into their pension plan will remain frozen until December 30, 2017. The exception to this freeze is that any contribution increases that had already been planned prior to the negotiated agreement will move ahead. Other than these planned increases, no new contributions increases can happen during the five-year freeze period.
This agreement in no way threatens the safety of your pension. OPSEU made sure that the current joint governance structure of these major pension plans was not touched, and that government has no access to our members’ pension assets.
What happens to contributions in the future depends on many variables such as interest rates, investment performance and mortality rates. Our pension plans are in good shape and there is no reason to believe that will change.
If your plan has cost of living increases they will continue. In the event of a funding shortfall, cost of living increases may be adjusted for future service, and “ad hoc” or “contingent” increases may be affected. It is up to each individual plan to determine how to handle a funding shortfall should one occur.
If you have already retired your pension benefits will not be affected by this agreement.
For more information about the negotiated agreement and your pension plan, please follow the links below:
What the government tried to do: Questions and Answers about Ontario government plans to change public sector pension plans
(Download the PDF: Questions and Answers )
1. Lately there has been a lot of talk that the Ontario government plans to make big changes to pension plans for public sector workers. What is McGuinty planning, exactly?
The McGuinty government wants to create two pension “superfunds,” each of which would merge several different public sector pension plans into one. The government would get rid of joint trusteeship, where unions and employers share responsibility for plan management, and hand over control of the plans to private-sector money managers.
The government says it wants to drive down the cost of future pension contributions – even as it prepares to pay out billions in commissions to Bay Street.
2. Why is the government doing this now?
There are two main reasons.
First, the government’s main strategy for reducing the province’s deficit is to cut public services and reduce jobs, wages and benefits for the people who provide those services. The attack on pensions is part of the same strategy as the government’s moves to “freeze” wages and impose other takeaways.*
Second, public sector pension plans manage not just billions, but hundreds of billions of dollars, and powerful financial interests want to control those funds for their own profit. It is true that the deficit needs to be managed, but by portraying it as a crisis, Bay Street hopes to persuade Ontarians to go along with sacrifices they would never accept under normal circumstances.
* Note that a wage “freeze” is not actually a freeze at all, but a wage cut equal to the rate of inflation.
3. What OPSEU members are affected?
The government wants to merge these plans:
- the OPSEU Pension Trust, covering OPSEU members at the Ontario Public Service and the Liquor Control Board of Ontario;
- the CAAT Pension Plan for college workers;
- the Healthcare of Ontario Pension Plan; stand-alone pension plans at Ontario universities;
- pension and other funds controlled by government agencies in the electricity sector; and
- funds held by the Workplace Safety and Insurance Board.
According to news reports,* the government is not proposing changes to the Ontario Teachers’ Pension Plan or the Ontario Municipal Employees Retirement System (OMERS), although this could change. The pension plan covering Ontario Public Service managers and middle managers is not jointly trusteed and is fully controlled by the government already. It is not known whether their plan would be included in any pension “superfund.”
* Howlett, Karen (2012). “Ontario eyes pension superfunds to hold public sector retirement savings.” The Globe and Mail. September 21: 1.
4. Is this even legal? Where does the government get the authority to do this?
Obviously, the government has the power to make legislation on a wide range of issues. But what is equally obvious is that we live in an economy that is based on respect for property rights and legal contracts. So it is hard to see where the government gets the authority to make the changes it envisions.
What the government is proposing is really a theft. Pension funds exist for no other purpose than to provide pensions for plan members; that money belongs to plan members. Taking away joint trusteeship would take away plan members’ ability to control their own property as they see fit.
5. How will these changes affect my future pension?
If we lose joint control of our pension plans we lose control of the contribution rates we pay, the pension income we receive, and the way our money is invested. If the markets are not doing well and trustees do not have the ability to raise contribution rates, for example, plans would be forced to reduce pension incomes or extend the point at which plan members could qualify to retire.
If the plan is controlled by private managers, we could see them follow a riskier investment strategy. Or they could decide to do away with inflation protection for retirees’ incomes, meaning your spending power would go down every year.
Having a “defined benefit” pension plan means knowing what your pension income will be – and when. The changes proposed by the government undermine this basic pension promise. If we lose control of our pension plans, we lose control of our future.
6. How will these changes affect my pension if I have already retired?
Most people would naturally expect that the new plan managers would uphold the commitments made to retirees. But changing governance could change pensions. We have no guarantees that existing pensions would still provide the same income to retirees five or 10 or 20 years down the road.
7. Has the government consulted OPSEU about these changes?
We have had conversations with the government to find out what they are planning to do, and we have put forward our ideas for real improvements to plans, but we will not agree to any changes that have a negative effect on plan members, whether they are still working or already retired.
8. Do we know when the government might put forward legislation?
Originally the government wanted to bring in legislation early in September 2012, but opposition to their plan, as well as the complexity of what they are proposing, has forced them to delay. Many observers believe the government wants to implement changes to pension plans before the end of December.
9. Is OPSEU contemplating legal action against the government’s plans for pensions?
We have retained legal counsel, as have other unions that are involved in pension plans, and we will not hesitate to take legal action if necessary. Until that time, though, our goal is to persuade the government to cancel its plans to merge pension plans.
10. What can OPSEU members do to safeguard their retirement savings?
This is a political issue, and the government will respond to political pressure. The union is asking all OPSEU members to get informed, to contact their MPPs, and to tell them in no uncertain terms that these changes cannot happen. Those pension funds belong to OPSEU members, not to the government – and definitely not to Bay Street.
For more information, members can visit the web site at www.amatteroftrust.org. On the web site you can also send an e-mail directly to your MPP. Once you’ve done that, get together with a group of co-workers, or fellow retirees, and go visit your MPP in person. Face-to-face contact sends a strong message to elected officials who hope to get re-elected.
11. Should we be talking to Liberal MPPs only, or to all MPPs?
It’s very important to talk to all MPPs. We expect the NDP to support workers, not Bay Street, on this issue, but thoughtful Conservatives should be on our side as well. The protection of private property is one of their core values, and what McGuinty’s plan is all about is really the theft of private property. We want all MPPs to understand that.
12. Everybody knows the Ontario government has a big budget deficit. Why shouldn’t government try to cut back on spending?
Public spending did not cause the provincial deficit. What drained provincial coffers was a) the 2008-09 recession; and b) 17 years of tax cuts. If Ontario had the same tax rates today that it had in 1995, there would be no deficit!* In spite of that – and because of years of spending cuts – Ontario’s budget was balanced for three years before the recession hit. And to top it all off, Ontario has the lowest program spending of any province in Canada – 11 per cent lower than the average of the other provinces, in fact.** Public services did not cause the deficit. Neither did public employees’ wages or pensions.
Cutting public services, jobs, and wages takes money out of the economy and reduces the revenue flowing to government. The best approach to the deficit would combine greater tax fairness for corporations and high-income individuals with a serious job-creation strategy. Reducing the deficit won’t create good jobs, but creating good jobs will reduce the deficit.
** Mackenzie, Hugh (2010). “Steering Ontario Out of Recession: A plan of Action.” Ontario Alternative Budget Technical Paper. Toronto: Canadian Centre for Policy Alternatives: 8.
** Duncan, Dwight (2012): Ontario 2012 Budget. Toronto: Queen’s Printer for Ontario: 8.
13. Isn’t it hard to defend our pensions, which some people seem to think are “gold-plated,” when most workers these days don’t have workplace pension plans at all?
The real pension crisis is not that a third of workers have workplace pension plans; it is that two-thirds of workers do not. Most employers, especially in the private sector, simply refuse to fund decent pensions for their workers. That is why OPSEU, along with the rest of the Canadian labour movement, are calling for a major expansion of the Canada Pension Plan. It is cost-effective, well-managed, and secure. Most workers would be happy to contribute more to it in the knowledge that employer were, too.
Most public sector pensions are very modest. For example, retirees who draw a pension from the OPSEU Pension Trust receive less than $20,500 a year on average; the CAAT Pension Plan pays out $22,800 on average; and HOOPP pays less than $14,300 on average. Not exactly “gold-plated.”
Authorized for distribution by the OPSEU Pension Liaison Committee and Warren (Smokey) Thomas, President.