Honour Our Deal: Regina Civic workers calling for retirement security
By Tria Donaldson and Mark Janson
All workers deserve to retire with dignity. Workplace pensions are a key piece of providing a secure retirement. But all too often workplace pensions are under attack.
Last month, workers and the local community were shocked when the provincial government’s pension regulator, the Saskatchewan Superintendent of Pensions, announced that it was considering cancelling the Regina Civic Employees Superannuation and Benefit Plan. This plan represents 4,000 current employees, and 2,000 retirees, that include teaching assistants, librarians, firefighters, bus drivers, city workers and management who work for five different employers. The average pension earnings are just $1,600 a month.
Last month, workers and the local community were shocked when the provincial government’s pension regulator, the Saskatchewan Superintendent of Pensions, announced that it was considering cancelling the Regina Civic Employees Superannuation and Benefit Plan.
Now, even this modest monthly income is at risk.
Since 1958,The Regina Civic Employees’ Superannuation & Benefit Plan has provided defined benefit pensions for workers at the City of Regina, some Regina Qu’Appelle Health Region employees at the Regina General Hospital, non-teaching staff at the Regina Public School Division, the Buffalo Pound Water Administration Board and the Regina Public Library. The workers are represented by the employee side Pension and Benefits Committee, and an alliance of unions who represent these workers- the Canadian Union of Public Employees, Amalgamated Transit Union, Saskatchewan Union of Nurses and Regina Professional Fire Fighters Association.
The move by the province is bringing longstanding tensions over the pension plan to a head. The main discrepancy is over a pension deal signed between the City of Regina and unions representing the employee groups just over a year ago.
After the 2008 financial crisis, a funding shortfall was revealed in the Regina plan (and in virtually all other pension plans). The terms of the plan, and Saskatchewan’s Pension and Benefit Act, required the City and plan members to make up the shortfall through increased contributions. Plan members were prepared to comply with these rules, but the City was not. Council voted to break the terms of its own pension bylaw and provincial law and did not increase its contributions as required. Shockingly, the provincial pension regulator did not enforce the rules on the City. Instead, it allowed the City to renege on its contribution requirements so that it could work out an alternative deal with its employee groups.
Over the next two years, the City and the Pension and Benefits Committee did the hard work of coming up with a pension deal that saw employees making serious concessions, but preserved the defined benefit nature of the plan. The deal we worked out shifted significant amounts of risk from the City to workers and reduced the cost of the plan by one-quarter, exceeding the City’s cost savings targets. Both sides invested significant time and resources into making this deal.
Defined Benefit vs. Target Benefit
Years of hard bargaining invested in the pension negotiations resulted in a Letter of Intent that aimed at preserving the defined benefit nature of the plan. Defined benefits represent a promise to workers – a guaranteed paycheck that retirees can rely on to plan around. Alternative models, like a target benefit model, provide riskier benefits for members and offer no payout guarantees.
Many of these alternatives were explored but not adopted because the City was able to achieve significant savings through the agreed upon concessions. The City also made it clear in a letter sent to the regulator’s office after the deal was signed that a target benefit plan, while desired by some, “was not the negotiated solution achieved.” All sides understood this, and all sides acknowledged this explicitly after the deal was signed. The concessions contained in the Letter of Intent were clearly intended to preserve the defined benefit character of the plan.
So they had a deal. What happened?
Implementing the deal requires the approval of the provincial Cabinet, who may look to the provincial pension regulator for advice. The regulator had raised several general concerns before the deal was signed, but the City and worker groups felt confident that those concerns were addressed in the deal, and pledged publicly to work together to see the agreement implemented.
Since that time, the parties were working on the final issues around plan governance that needed to be addressed. Meanwhile, the plan had a stellar year in 2013, doubling the assumed rate of return on its investments.
On New Year’s Eve 2013, the City’s position changed unexpectedly. Despite the good news from the plan, the City was suddenly no longer willing to work with employee groups to see the deal implemented. In direct contradiction to what it said when the deal was signed, the City now claimed the deal was not implementable, and threw the blame onto the provincial regulator. It said the only solution that will be acceptable to the province is if the plan is converted into a target benefit plan.
Plan members made serious concessions with the express purpose of preserving the defined benefit plan. The City wants to keep those concessions, but now it also wants to get rid of the defined benefit plan! It says this is the only solution that the province will accept, even though the City has failed to work with us to push for acceptance of the deal it signed, supposedly in good faith. The City continues to fail to meet its required contribution rates to the plan – bylaws and provincial laws continue to be broken at the expense of plan members. Pension plans across Canada are returning to surplus, but the Regina plan’s recovery is stalled because of the failure to implement the deal.
It is in this context that the provincial regulator stepped in. It is accepting written submissions until November 30, 2014 about the plan. After that it will make the decision whether or not it will cancel the plan.
This puts employee representatives in an incredibly tough spot. And they need your help to get out of it.
The situation in Regina is one that everyone who is concerned about retirement security should be watching closely. The bold move of the provincial pension regulator is a dangerous precedent that cannot be allowed to go unchecked. The City should not be allowed to walk away from a deal it signed just one year ago, especially when the plan is facing serious scrutiny from the provincial government.
Please take a stand with these workers and go to www.honourourdeal.ca to take action.