When dozens of people in wheelchairs began jamming into the waiting room outside his office on Dec. 3, Ken Hardie knew he was going to have a very bad day. Hardie is communications director for Translink, and the angry people waiting to scold him were stranded patrons of the HandyDART service that for decades has taxied people with disabilities throughout the Vancouver region.
But for nearly two months, the HandyDART drivers had been on strike, and now the riders were storming Translink, and all Ken Hardie could tell them was, "I have heard everything you've said. If it was my money to give I would."
What had crashed HandyDART? Pensions. To be specific, the fact that Translink this year gave the HandyDART contract to a private American firm, MVT Canadian Bus, which now is trying to roll back union municipal pension plans and put all employees on a modified RRSP plan into which MVT pays six per cent.
MVT considered the pension change its main bargaining issue, and the union refused to accept it.
The HandyDART mess is but one of many instances across Canada where employers are chafing under previous pension arrangements and trying to trim their liabilities -- which invariably means lessening the payouts employees receive when they retire.
And as Ken Hardie's bad day demonstrated, when previous promises don't pan out, anger and political backlashes often ripple out even beyond the confines of the company and its employees.
No pension unscathed
"There isn't a pension plan unscathed by the financial meltdown. They have all taken a hit to some degree, depending on their exposure to the equities market," said Lorie Mayhew who, as secretary-treasurer of Local 378 of the Canadian Office and Professional Employees union, chairs its pension committee.
Low interest rates as the economy struggles have created a double whammy for firms with pension plans, Mayhew told The Tyee. "The lower the interest rates, the more assets the company needs to cover its liabilities." So, as companies are trying to scrimp in a downturn, they are having to pour more money into pension plans to keep them solvent.
To add to the pressures, regulations are more stringent than they used to be in evaluating whether a pension fund is "a going concern," meaning likely to be able to meet its obligations in years to come. The old measure allowed firms to "smooth" or average their anticipated contributions into the fund over a longer time period in making the case that they were keeping their pension fund healthy. Now regulators have tightened that leash.
Another point of contention is fund solvency. A pension fund is deemed solvent if, were it to wrap up today, the company could pay employees a promised lump sum. But tricky accounting or a sharp drop in fortunes can prevent it from becoming apparent that a pension fund is underfunded until it's too late.
Take the case of Nortel's bankruptcy. The company's top executives received $45 million in bonuses and pensions worth $1 million a year while the pension plans for other employees were underfunded by 33 per cent.
To lighten their responsibilities and risk, more and more companies, including MVT, are trying to shift from directed benefits plans, which guarantee a set pension payment to retiring employees, into directed contribution plans, in which the employer merely guarantees to put a percentage of an employee's pay into a fund that rises or falls depending on the market. The new pension arrangement proposed by MVT was one such plan.
But the strikers who said no to MVT's smaller, riskier pension plan are up against a national trend. The number of Canadians whose employers provide pensions is steadily dropping -- to just over one out of three, currently.
Vying visions for pension reform
Figuring out how to shore up the solvency of existing workplace pensions, and provide for the increasing number of workers who don't have them, is a big item on the agenda as provincial finance ministers join Conservative Finance Minister Ted Flaherty in Whitehorse for a summit meeting today and tomorrow. They are learning about and debating several options The Tyee has reported on in its series about fixing Canada's pension system. The two proposals at the forefront are:
Doubling the Canadian Pension Plan benefit. Backed by the Canadian Association of Retired Persons, the Canadian Labour Congress and the federal New Democracts, this plan would gradually increase worker's mandatory CCP contributions by about three per cent, yielding double the CPP payments for the next generation.
Creating a voluntary CPP 'supplement.' The idea put forward by the federal Liberals on a national level, and by the B.C. and Alberta government on a regional basis, is to allow workers and employers to voluntarily contribute to a new investment pool of funds that would generate larger yields than the average RRSP because of lower management fees and economies of scale.
Shoring up teetering pensions
When it comes to shoring up existing pension plans, various proposals seek to strengthen regulatory oversight and to prevent private pension funds from too much exposure to risk.
As the economy continues to sputter, another focus is on how to protect the retirements of workers whose employers go bankrupt.
When that happens, says the Federal Liberal website, "The government should take the necessary steps to give pension plan beneficiaries the option to pool their plan with the CPP so that their savings can be managed for growth."
Currently, a bankrupt company's pension recipients are among the last to be paid when creditors swoop in to collect. The Liberals propose to move to the front of the line those with disability benefits.
The Canadian Labour Congress proposes a new national insurance system to back workplace pensions. The CLC proposes "an agency to adopt abandoned pensions when an employer shuts down permanently [and a] fund that insures a base floor of pension benefits when an employer restructures during bankruptcy proceedings and is unable to make good a solvency deficit."
Golden years or fool's gold?
There's little question something needs to be done to improve incomes for seniors, said Art Kube, a past president of the Council of Senior Citizens Organizations of B.C. Many have seen investments decline and some private pension payments cut by as much as 40 per cent.
"Seniors right now are very, very, nervous about their retirement income," he said. "Those 'golden years' are fool's gold."
The CSOC is advocating for a national system to insure pensions, increases to the basic old age and guaranteed income payments, and a doubling of the CPP. "That is what is needed," he said. "We have said that long before the labour congress."
Seniors are a very mixed group, he said. Some are very rich while others are very poor. In some cases a spouse dies leaving the survivor with all the same expenses to run the household but with half the income, he said. "That's where the crunch comes in," he said. "The fastest growing segment of homelessness is among seniors."
Reverend Al Tysick, who runs the Our Place drop in centre and housing in Victoria, said half a dozen seniors are living in the facility and he can think of many more seniors who are on the streets. Better, easier to access, funding for retirement would help, he said. "For people who live in poverty, they're not saving they're surviving," he said. "They're not putting money away for retirement."
Even for himself, and he's obviously much better off than many of the people he sees in a day, retirement will be a challenge, he said. At 63 years old he has no plans to stop working, he said, but after decades as a missionary at the bottom of the church's pay scale he has no RRSPs and not enough of a pension to count on. His choice will likely to be to sell his home and move his family, he said.
The small amount of money available to the poor and the elderly is part of the wider story of the growing gap between rich and poor, he said. "I've studied poverty all my life and I really believe we're on really shaky ground."
Even small fees a challenge
As business manager for Plumbers and Pipefitters local 324, Vancouver Island, Dale Dhillon administers what's known as a multi-employer pension plan. The plan is solid, he said, though he acknowledged it's been a tough couple years.
Some of the "oldtimers" have pensions that date from a time when the contributions were smaller, he said. Recently he visited one whose income from all sources came out to $1,800 a month before taxes. "He lives in a trailer, right," said Dhillon. "They don't eat well. I go up and see him sometimes. The heat's turned off. It's not good."
There are many older people living in need, said Wendi Lawrence, an administrator with the B.C. Federation of Retired Union Members.
A former public sector worker, she has a good pension herself, she said, but sees people all the time who are struggling. FORUM charges a $15 annual membership fee. "That's sometimes tough for people," she said.
Often members decline to travel to participate in the group's events. "Lots of times people say, 'We'd like to come, but we just can't.' Very often it's the money."
Many seniors are quietly living on tiny incomes, she said. "We need to take better care of people who have worked all their lives in this country," she said. "I think Canada would be more than willing to support a plan that gave seniors more dignity in their retirement years."