After defending literally hundreds of individual member grievances related to the Phoenix pay system and lobbying the government for many months with no permanent fix in sight, PIPSC has today filed policy grievances against the federal government, accusing the Employer of continuously violating the terms of our collective agreements since the implementation of the new Phoenix pay system in February 2016.

Specifically, we state that the Employer has, among other things, “made continuous and on-going errors in pay, including but not limited to: failure to be paid, substantial delays, miscalculation, underpayments, overpayments, and inaccurate payments for overtime, extra duty pay, allowances, annual increments, retroactive pay, acting pay, promotional pay, payments in lieu of severance.”

In a second set of grievances, we are also grieving problems paying disability benefits and maternity/parental leave benefits as violations of our collective agreements and the Canadian Human Rights Act (CHRA).

Our members have shown remarkable patience and, in some instances, astonishing forbearance in coping with the problems and deprivations imposed by the government’s failure to accurately and reliably pay the salaries our members are owed.

Our demands that the Employer “immediately pay all monies owed,” “pay members accurately and in a timely manner” and, “process all information related to disability and maternity/parental benefits in a timely manner” are fair and reasonable demands to make under what for many have been – and remain – extremely trying circumstances.

Under Canadian labour law, individual union members are prohibited from filing class action suits and are obligated to seek remedies through established grievance procedures. We hope that today’s policy grievances expedite resolution of a problem that should never have been allowed to occur in the first place and should never be allowed to happen again.

Debi Daviau
President

Bill C-27: The Introduction of Target Benefit Plans

What Is Bill C-27?

• Bill C-27 introduces a new pension framework into the federal jurisdiction –Target Benefit plans.
• It proposes sweeping changes to the Pension Benefits Standards Act (PBSA).
• The PBSA guarantees employees the benefits they have already earned and forces employers to set aside appropriate resources to fund these commitments.
• The PBSA applies to federally-regulated employers such as Crown Corporations, banks, telecoms and transportation companies.
• Bill C-27 weakens the PBSA and provides employers with an opportunity to avoid their obligations to pensioners.
• It also provides a process for employers to convert Defined Benefit (DB) plans into Target Benefit (TB) plans.
• Conversion cannot be made unilaterally by the employer -Plan members must agree to the changes.
• An employer could also wind up an existing DB plan and open up a new TB plan or run both plans in parallel.

Who Is Affected?

• Some 1700+ PIPSC members are affected (CCC, CMC, CMN, CTC, CRPEG, NGC, NAVCAN, WPEG, WTEG, YHC).
• Thousands more of present and future Canadians retirees are also impacted.
• Bill C-27 is a direct threat to their retirement security.
• And if the legislation comes into effect, we can expect employers to aggressively push for these changes and force other workers to accept the erosion of this vital and long-standing benefit. Bill C-27 sets a dangerous precedent for all Canadians by removing DB plans from retirement planning.
• The government should focus its energies on creating a legislative and economic environment in which Defined Benefit plans can thrive.

Defined Benefit vs. Target Benefit

• Most PIPSC members enjoy a Defined Benefit plan under the Public Service Superannuation Act (PSSA).
• It provides secure and stable income during retirement and predictability during their working life.
• In a DB plan, the employer assumes responsibility for funding shortfalls. While terms can change, when an individual makes a contribution for a period of time, the benefits received for that period are secure (except in the case of employer bankruptcy).
• Target Benefit plans are similar to DB plans except that risk is passed on to plan members, who assume responsibility for deficits or unfunded liabilities. Safeguards and protections that currently protect employees would be removed. Employee benefits and contributions may rise and fall.

What Happens With TB Plans:The New Brunswick Example

• In 2012, the New Brunswick government brought in what it called
• “Shared Risk” pensions.
• The term is misleading because all risk actually shifted from the employer to plan members –including people who had already retired.
• The NB government also allowed workers to make the change voluntarily. Those who did felt they were misled. Plan members were told that the terms of their new pension were
• “virtually guaranteed” when, in reality, by converting their pension over, they had just given up their legal guarantee.
• Since the New Brunswick law came into effect, the number of people with a DB pension in the province has dropped by over 14%.
• Does this sound like retirement security to you?

What Have We Done So Far To Fight C-27?

• We wrote to the federal Finance Minister.
• We encouraged PIPSC members to sign a petition against Bill C-27.
• We encouraged members to send a special postcard to their Member of Parliament (MP).
• We developed a sample letter to MPs.

What Can YOU Do To Fight C-27?

• Sign and send the postcard (available through the Mobilization team) to your MP (it’s postage-free):
• Write to your MP (the sample letter).
• Become a more active member, join the Better Together team and help us fight for good pensions for everyone.
• Follow us on Facebook and on Twitter (@pipsc_ipfpc).

Questions?

Bill C-27 – Who does this affect?

Everyone who supports Defined Benefit pension plans should be opposed to this proposed legislation. The federal government has jurisdiction over two major labour relations regimes: (1) the federal sector (Crown Corporations, banks, telecoms and transportation companies etc); and (2) the federal public service (Treasury Board and Separate Agencies). Bill C-27 directly impacts the former but not the latter. However, the federal sector covers numerous members across various jurisdictions and changes to existing legislation would have a broad national impact. Bill C-27 does not currently affect any member under the Public Service Superannuation Act (PSSA), however we see that this legislation does set a dangerous precedent for all Canadians by removing DB plans from retirement planning. If these proposed sweeping changes take effect in one regulatory area, a powerful trend will be set in motion and pressure will increase to make changes in the other.

Bill C-27 and the Pension Benefits Standards Act (PBSA)

Bill C-27 proposes sweeping changes to the Pension Benefits Standards Act (PBSA). The PBSA applies to federally-regulated employers such as Crown Corporations, banks, telecoms and transportation companies. The PBSA was originally put into effect fifty years ago to protect workers and workplace pensions by forcing employers to keep their promises. The legislation guarantees employees the benefits they have already earned and forces employers to set aside appropriate resources to fund these commitments. Bill C-27 weakens the PBSA and provides employers with an opportunity to avoid their obligations to pensioners.

Target Benefit Plans vs. Defined Benefit Plans

Bill C-27 formally and legally introduces a new pension framework into the federal jurisdiction – Target Benefit Plans.

On top of introducing this new pension structure, the legislation also provides a process for employers to convert Defined Benefit Plans into Target Benefit Plans.

Most PIPSC members enjoy a Defined Benefit (DB) plan which provides secure and stable income during retirement and predictability during one’s working life. In a DB plan, the employer assumes responsibility for funding shortfalls. To address these, they may raise contribution rates but the benefit almost never changes. While terms can change, when an individual makes a contribution for a period of time, the benefits received for that period are secure (except in case of employer bankruptcy).

Target Benefit (TB) plans are similar to DB plans except that risk is passed on to plan members, who assume responsibility for deficits or unfunded liabilities. Safeguards and protections that currently protect employees are transferred over to the employer. While the latter’s contributions do not change, employee benefits and contributions may rise and fall.

Converting Defined Benefit Plans into Target Benefit Plans.

The new legislation will not automatically convert all Defined Benefit plans into Target Benefit plans. Conversion cannot be made unilaterally by the employer, as plan members must agree to the changes. An employer could also wind up an existing DB plan and open up a new TB plan, or run both plans in parallel.

Bill C-27 defines a process for employers to “exchange” one plan for the other and provides a mechanism for moving from a DB to a TB plan. This includes the notice process to be followed by the employer for DB plan members to surrender the benefits they have already accrued.

This provision is extremely dangerous. It provides employers with a goal that benefits them at the expense of workers and provides a blueprint for how to achieve it.

Converting Defined Benefit Plans into Target Benefit Plans. (continued)

If the legislation comes into effect, we expect employers to aggressively push for these changes at the bargaining table and force workers to choose between either a lengthy lockout or accepting the irreparable erosion of this vital and long-standing benefit.

The New Brunswick Example

In 2012, New Brunswick’s Conservative Government brought in legislation allowing employers to avoid past commitments and bring in what they termed “Shared Risk” pensions. The term “Shared Risk” is misleading because all risk is actually shifted from the employer to the plan members – including people who are already retired.

The provincial example was more extreme because it forcibly imposed this system on thousands of workers, but it also allowed for workers to make the change voluntarily. The preliminary results of these actions have been troubling. Those who did voluntarily convert their pension felt they were misled with inaccurate or misleading information. Plan members were told that the terms of their new pension were “virtually guaranteed” when, in reality, by converting their pension over, they had just given up their legal guarantee.

In the short period of time since the New Brunswick law came into effect, the number of people with a DB pension in the province has dropped by over 14%.

What is Bill C-27?

Bill C-27 is a federal government-sponsored bill that would make it easier for employers to convert existing employee Defined Benefit (DB) pension plans to so-called Target Benefit (TB) plans. TB plans offer much less secure post-retirement income than Defined Benefit plans, shifting the burden of a secure retirement from employers to employees. While employees would need to agree to any such change, there are serious concerns that those affected by Bill C-27 would be pressured against their best interests to convert to TB plans. In addition, while the proposed legislation does not apply to most federal government employees, there are serious concerns that such changes would spell the eventual elimination of DB plans altogether.

Why are Defined Benefit pension plans so important?

Defined Benefit pension plans provide a guaranteed stream of post-retirement income to workers. It’s guaranteed because employers are required by law to meet the plan’s payment obligations when employees retire. That means retirees with DB plans have more predictable, disposable income to spend (which helps them and the economy), contribute more in taxes (which helps public programs), and do not pose a burden to income-support programs such as the Guaranteed Income Supplement (GIS).

What’s wrong with Target Benefit pension plans?

Target Benefit plans do not require employers to meet the same guaranteed payment obligations as Defined Benefit plans. The plans only “target” post-retirement income meaning the benefits could go down and employees must shoulder the risk. That’s clearly more beneficial to employers and harmful to employees.

While TB plans are generally better than RRSPs and so-called Defined Contribution plans, which offer no promise of return, they are still a far cry from DB plans, which offer the most secure retirement income available.

I’ve heard Defined Benefit plans are unsustainable. Is that true?

When managed properly, DB pension plans aren’t only the most reliable source of post-retirement income for workers, they’re also among the most sustainable. That’s why they’ve remained the most popular form of pension plan for decades. Among workers in Canada who have registered pension plans 71% are DB plans. One of the main reasons DB plans have been underfunded in the past is that employers have been allowed to raid pension funds in good times, leaving them vulnerable in bad times.

OK, but what about private sector workers who don’t have DB pensions?

It’s true that more public sector workers have DB plans than private sector workers. One of the reasons is strong unions. But it’s not the only one. All Canadians want and deserve a secure retirement and should lobby their Members of Parliament for stronger laws protecting and promoting DB plans. Opposing Bill C-27 is a start.

Visit the PIPSC website to download a “Stop C-27” postcard that you can send to your MP. If you’re not already an active PIPSC member, join the Better Together team and help us fight for good pensions for everyone. If you’re not yet a member of a union consider joining one and advocate for stronger pensions. Other organizations, such as the National Association of Federal Retirees (NAFR), are also strong advocates of Defined Benefit pensions and worth joining or contacting. When we work together, we can ensure that we all have a secure retirement!

Press Release

Ottawa, April 28, 2017 – Representatives from several public service unions reacted cautiously yesterday to the creation of a government working group to tackle the Phoenix pay system.

The “Working Group of Ministers on Achieving Steady State for the Pay System”, will be chaired by Ralph Goodale, Minister of Public Safety and Emergency Preparedness and comprises several cabinet ministers, including Finance, Treasury Board and Public Services.

Public Service Alliance of Canada President, Robyn Benson, said that “PSAC welcomes any announcement from the government aimed at fixing Phoenix. We appreciate that the government is finally taking these problems seriously, but we need to see some action.” She added that public service employees need a system that pays them accurately and on time. “We have yet to see a timeline for when that will happen.”

“This announcement is the result of constant lobbying by public service unions on behalf of their members,” added Debi Daviau, president of the Professional Institute of the Public Service of Canada. “In the last federal budget, the government failed to respond to our request to pledge $75 million to help fix Phoenix. While this is not new money, the $70 million per year for the next two years that they have now committed to Phoenix is welcome news. We will continue to make sure that they spend that money to fix the system.”

Union representatives will work closely with this ministerial working group on Phoenix and will remind the government that it must compensate affected employees for pain and suffering, and compensate them for loss of interest as a result of delayed pay.

According to André Picotte, acting president at the Canadian Association of Professional Employees, “the Phoenix fiasco is the result of plan that did not take the interests of the public service employees to heart.

For his part, Jason Godin, president of the Union of Canadian Correctional Officers – CSN said: “We want to be positive and believe that this new initiative to settle Phoenix will be the right one, but we remain cautious. We still have new cases that pop up every two weeks, so it's hard to be very enthusiastic at the moment”.

Finally, public service unions also demand that the government commit to three things: hire more staff with full access to Phoenix in order to respond to the requests made by employees; hire permanent, not temporary, staff at the call centres who have the training and support to help our members and; keep the satellite pay centres open until all problems with Phoenix have been resolved.

-30-

The 18 bargaining agents of the federal public service employees are:

• Association of Canadian Financial Officers
• Association of Justice Counsel
• Canadian Air Traffic Control Association, Unifor Local 5454
• Canadian Association of Professional Employees
• Canadian Federal Pilots Association
• Canadian Merchant Service Guild
• Canadian Military Colleges Faculty Association
• Coast Guard Marine Communications Officers Unifor Local 2182
• Unifor, Local 87-M
• Federal Government Dockyard Chargehands Association
• Federal Government Dockyard Trades and Labour Council (East)
• Federal Government Dockyard Trades and Labour Council (West)
• International Brotherhood of Electrical Workers, Local 2228
• Professional Association of Foreign Service Officers
• Professional Institute of the Public Service of Canada
• Public Service Alliance of Canada
• Research Council Employees' Association
• Union of Canadian Correctional Officers - CSN

For information:

Pierre Lebel, CAPE
plebel@acep-cape.ca
613-236-9181, ext 263 or 613-889-1027

Jonathan Choquette, PSAC
choquej@psac-afpc.com
819-773-2511

Johanne Fillion, PIPSC
jfillion@pipsc.ca
613-228-6310, ext 4953 or 613-883-4900

Katerine Desgroseilliers, CSN
Katerine.Desgroseilliers@csn.qc.ca
514-598-2163 or 514-265-4250