Pension Plan Discussions: September 22, 2013

Sunday September 22, 2013.

In a bulletin to the membership dated September 19, 2013 Denis Lemelin National President of the CUPW informed us that in early September, the Union met with the Corporation and made a proposal to put in place a joint Working Committee to address “the realities of the pension plan”.

He also sent a letter dated September 12, 2013 to Lisa Raitt, Minister of Transport, asking her to get involved in the process and organize tripartite meetings between CPC, CUPW and the Harper government to discuss the post office pension plan.

The Sunday e-mail expresses to you and to the local executive committee its utmost concern with the decision of the National Office of the CUPW to initiate these consultations and enter into discussions with the Corporation and the Harper government regarding the solvability of our defined pension plan without first having held meetings with all the active and retired postal workers throughout the country on this most important question.

The National Executive Board has obtained no mandate whatsoever from the membership to enter into such tripartite discussions on the future of our defined pension plan.

In my view, to do so at this particular time is a serious mistake.  This will definitely give an opportunity to the Harper government and to the CEO of Canada Post Corporation to move further on the offensive and attack our defined pension plan with greater strength by demanding that postal workers make important concessions.  It will also serve to intensify the current media frenzy and provide the neo-liberal think-tanks and institutes with a momentum to push to an even greater extent the retrogressive austerity agenda of the monopolies onto the workers and the society in general.

On the one hand, the National Union criticizes the Corporation for holding private consultations with stakeholders on the future of the post office and demands that all consultations be public while on the other hand, the Union seeks the same thing for itself with these discussions. The Union must in no way dismiss the crucial role that must be played by the membership in safeguarding our defined pension plan.  It is only by consciously and actively participating in the struggle of all Canadian workers to defend the defined pension plan that we can move forward and provide our rights with a guarantee.

This is indeed the first step towards the imposition of serious concessions and the first step towards undermining our defined pension plan.  What will be the positions the Union will be presenting at these discussions if the membership is left out of the discussions and out of the decision-making process?

What is the independent analysis of the Union regarding the situation facing the pension fund and why is the Union proposing to “identify all possible scenario’s” within the confines of a tripartite arrangement if it has such an independent assessment of the situation in the first place?  This is a worrisome proposition to say the least.

For your information, the Sunday e-mail is printing the union bulletin dated September 19 written by Denis Lemelin which appeared on the CUPW website the same day and the letter dated September 12, that he wrote to Minister Raitt asking her government to get involved.

Also, the Sunday e-mail is reprinting the article written by Louis Lang, not long ago, entitled “Canada Post Must Fulfill Its Obligation to the Pension Plan”.   Louis Lang is a former Ottawa local union president and a retired postal worker.   While this article was featured in the June 16, 2013 edition of the Sunday e-mail, many new readers have not had the chance to read it.


September 19, 2013

Pension / Bulletin          

In recent months, there have been a lot of media reports and discussions about the future of Canada Post. The debates started again last April, with the publication of a Conference Board of Canada report on the future of Canada Post. The Corporation took advantage of the situation by launching an on-line public consultative process and having “private” talks with various stakeholders. Several right-wing groups, such as the Fraser Institute and the C.D. Howe Institute, made sure to comment, each time attacking the public postal service and the rights of postal workers. And each and every time, we responded with our own solution, i.e. the expansion of services, including financial and banking services.

However, you have probably noticed that in each of its interactions with the media, Canada Post never fails to point out that it will be in a difficult financial situation by mid-2014. It argues that this is mainly due to the pension plan and the special pension fund payments Canada Post will have to make once its $2.5 billion line of credit, which is tied to the pension fund, is maxed out.

A Long-Standing and Worrisome Situation

The debate on defined benefit pension plans, such as ours, has been going on for many months. Issues like the more than $5.9 billion solvency deficit, or the steadily weak interest rates, should be a concern to all of us. We all want a pension plan that protects us in the long term and that is not singled out every time Canada Post announces a deficit. We need to find a permanent solution.

That is why the leadership of the CUPW, including the CUPW representatives on the CPC Pension Advisory Council, has met with our actuaries and pension experts to discuss the situation. We have discussed the matter on the National Executive Board and have decided to begin talks with Canada Post.

Initial Meeting Held

In early September, we met with Canada Post and proposed to put in place a Working Committee to address the realities of the pension plan. We are waiting for their answer. Rest assured that regardless of their answer, we will continue to fight for a long-term solution that will protect our pension plan. These discussions are important to each and every one of us. Stay informed. Additional information will be provided to you through bulletins and the CUPW website ( as it becomes available.

In Solidarity,

Denis Lemelin


September 12, 2013

Pension / Letter

Lisa Raitt
Minister of Transport
Place de Ville
Tower C, 29th Floor
330 Sparks Street
Ottawa, Ontario K1A 0N5

Dear Minister Raitt:

As Minister of Transport, you have probably read the various documents and newspaper articles on the future of Canada Post. In addition, you are well aware of the positions of the various stakeholders on this matter, including ours.

As you know, the debate on the future of the postal service, which we believe must be public, is of the utmost concern to us. That is why I am writing to you today about an issue that comes up in all of the Corporation’s interactions with the media: the pension plan. Canada Post states that its line of credit will be terminated in April 2014 and that it will have to resume special pension fund payments, which means it will no longer have enough money to operate.

We sincerely believe that the issue of the pension plan must be dealt with by the parties and that the Union has a say in the matter. The personal and financial security of each of our current members and of our retired sisters and brothers is at stake.

Discussions are currently underway between Canada Post and CUPW in an effort to find a solution. We believe that if we are to find a definitive solution to the long-term sustainability of our pension fund, the government will have to be a party to the discussion.

I believe it would be appropriate for you to organize a meeting (CPC, CUPW and relevant government representation) that would enable us to identify all possible scenarios, taking into account the laws and regulations that govern pension plans.

Thank you for considering this request.


Denis Lemelin

National President

c.c.  Deepak Chopra, President and Chief Executive Officer, Canada Post Corporation National Executive Board



Recent public statements by Canada Post give the impression that there is a serious crisis facing the corporation’s Defined Benefit Pension Plan and that this is threatening the financial viability of the post office.

The most recent Retiree Pension Bulletin states:

“In addition to volume decline, the increase in the Canada Post Pension Plan’s solvency deficit to be funded from $4.7 billion to $5.9 billion places greater pressure on the financial position of Canada Post going forward.”

In the 2012 Annual Report, President of Canada Post Deepak Chopra declares:

“On the cost side, we carry an unprecedented level of solvency deficit caused by a prolonged period of low interest rates and volatile investment returns. Together, these two forces — competition and cost — are creating a perfect storm. We must fundamentally rethink our business.”

Just like the discussion on the “evaporation of mail volumes,” Canada Post is using exaggeration and a doom and gloom scenario to hide from Canadians what the actual situation is regarding the Pension Plan and the overall situation of Canada Post in the Canadian economy. The agenda of the Harper government is further privatization and deregulation of the post office and that means severe cut-backs in services and further attacks on workers’ rights and benefits like the roll-backs that were rammed through in the last contract. It is clear that the Defined Benefit Pension Plan is next on the chopping block.

A closer examination of the fine print in the 2012 Annual Report shows that Canada Post has no intention of taking up their responsibility of dealing with the underfunding that exists. On the contrary, they will continue to avoid paying their required share and exacerbate the situation and are planning ultimately to shift the financial burden on the backs of the postal workers.

The corporation’s plans regarding the pension plan are outlined in 2012 Annual Report but they clearly have no intention of having a full public discussion of all the facts.

On page 34 of the Annual Report under the heading “Outlook 2013” we find the following:

“Pension and employee future benefit costs will continue to be a major challenge. Most defined benefit pension plans across the country face ongoing significant funding challenges in light of demographic shifts and a prolonged period of low interest rates and volatile investment returns. Plan sponsors such as Canada Post are required to eliminate these funding shortfalls, over time, and they are exploring innovative options to address the crisis, including potential regulatory relief.

“In the short term, Canada Post plans to continue using the legislation that allows Crown corporations to better manage their funding obligations, and will again seek approval of pension relief in 2013 to reduce its special solvency payments. However, given that under current legislation relief is capped at 15% of plan assets, we expect to reach the relief limit in early 2014.”

The Report points out under “Operating Activities” that there was an increase in cash generated from $196 million in 2011 to $310 million in 2012 mainly because Canada Post reduced payments into the pension and other post-employment and long-term benefit payments. In April 2011, amendments to the regulation of the Pension Benefits and Standards Act 1985, came into effect allowing companies with federally regulated pension plans to reduce their payments if ministerial agreement is provided.

The following quote from page 50 of the Report reveals how Canada Post avoided making the required special payments to eliminate a shortfall in the fund as required by the Act:

“Special contributions to the Canada Post Registered Pension Plan are dependent on changes in discount rates, actual returns on RPP assets and other factors such as plan amendments. Employer special contributions of $63 million were made in 2012, compared to $219 million in 2011. In 2012, the Corporation used the funding relief permitted by legislation. Without this relief, an additional $897 million in special solvency contributions would have been required from the Corporation. The aggregate amount of the funding relief as at December 31, 2012 is $1.3 billion. Based on the expected actuarial valuation, 2013 special contributions are estimated at $28 million.

“It is the Corporation’s intent to seek agreement from the Ministers to use the relief permitted by legislation beyond June 2013 to obtain a reduction of 2013 special solvency contributions. Without the relief, the Corporation’s contributions would increase by approximately $1.2 billion. The aggregate amount of the relief at the end of 2013 is expected to total $2.4 billion. As the aggregate amount of the relief is limited to 15% of RPP assets, the Corporation expects to reach the limit in early 2014, putting significant pressure on the Corporation’s cash resources. We are evaluating all options including regulatory relief and changes to plan design to help address these challenges.”

Thus the corporation was able to use amendments to the Act to avoid making their required contribution to the pension fund. Therefore, by the end of 2013, the actions of Canada Post in refusing to make their required contribution will cause an added shortfall in the plan of $2.4 billion. An important example is the way the corporation is avoiding its responsibilities for the past year. According to the Annual Report, in 2012, Canada Post recorded an actuarial loss of $780 million but they intend to use the legislative loophole to make a special contribution of $28 million which will add to the problems facing the Pension Plan.

But it doesn’t end there. Harper’s infamous omnibus budget Bill C-45 (the Jobs and Growth Act) helps the corporation to further shift the burden of the pension plan deficit on the backs of the workers. As of January 1, 2013, the Bill allows the cap for employees’ share of current service costs to be increased from 40 to 50 per cent. The Annual Report declares on page 50 that Canada Post “intends to share current service costs with employees on a 50/50 basis.” This plan has never been publicly announced or discussed.

The corporation claims that it is evaluating all options to deal with the problems facing the Pension Plan but it is clear that taking up the responsibility as plan sponsor to make special payments to cover all shortfalls is not one of the “options.” This is the height of hypocrisy since it was Canada Post along with other major corporations who pressured the Liberal government in the mid 1990’s to pass legislation allowing public service pensions including the CPP to be invested in the stock market. This has already resulted in billions of dollars being transferred from pension plans into the coffers of monopoly corporations.

Canada Post also did not hesitate to take hundreds of millions of dollars from the Pension Fund during periods when the fund was in surplus.

Canada Post’s 2012 Annual Report clearly shows that the attack against the Defined Benefit Pension Plan is an important part of the drive for further privatization and deregulation of the post office. The so-called financial crisis facing the postal workers’ Pension Fund is not due to any economic trend but is the result of a concerted, well-organized attack of the corporation and the government against the right of workers to a stable retirement income in a modern society.

The Annual Report repeatedly states that the corporation plans to secure its profits by reducing the revenue flowing into pensions and transferring it into general accounts to be used as they see fit. All the other talk about “solvency deficits,” and “volatile investment returns,” etc., etc. is just a smokescreen to hide the fact that the corporation is diverting revenue that should be going into the Pension Fund.

Concessions extorted from the working class are not solutions. All the assets of the corporation, including the Pension Fund, exist because of the value produced by postal workers who have a right to expect that the Defined Benefit Pension Plan is properly funded and maintained.

Canada Post must fulfill its obligations towards the workers!

Louis Lang

This is precisely what Canada Post does not want to do at this time that is to fulfill its obligation to the pension plan and its obligations towards the workers.  It is actually seeking for a way out of these responsibilities.  The National Office of the CUPW might just be providing them with such a possibility with its initiative to hold discussions within a tripartite arrangement on the future of the pension plan.

In Solidarity,

Danielle Desormeaux

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