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Thursday, November 09, 2006

BC Pension Rule Slashes Pensions of Retired Construction Workers

BC Pension Rule Slashes Pensions of Retired Construction Workers

For immediate release
November 9, 2006

VANCOUVER, BC: Pension fund advisors, a pension fund trustee and a former representative of BC’s construction industry today gathered at the Morris J. Wosk Centre for Dialogue to warn the public about a BC Pension fund regulation that is causing huge rollbacks to the pensions of retired BC construction workers.

“Current BC pension rules require pension plan trustees to set aside enough funds to cover these plans should they terminate at any moment,“ explained pension fund consultant Harvey Mason of D.A. Townley and Associates. “With the multi-employer plans that we advise on, the entire construction industry would have to collapse for these funds to fail – an extremely unlikely event given the $100 billion currently slated for construction here in BC.”

“We conservatively estimate that the cost of this one bureaucratic rule (referred to as the solvency rule) could add $1.00 to $2.00 an hour to our pension costs,” over the next two to three years said Harry Satanove, an actuary at Satanove & Flood Consulting. “As the contracts have already been negotiated, and the pension plans along with them, the only way to fund these entirely hypothetical costs is to reduce benefits - both future pensions for current workers, and in some cases pensions in pay for retired workers. The solvency rules do not benefit anyone – they do not benefit the employers and they do not benefit the workers, as they likely won’t ever see one cent of this money.”

“Worse yet, these rules that were supposed to protect pensioners have instead resulted in payments to our pensioners being reduced by up to 15%,” said Pension Fund Trustee Dave Beatty. “This is causing real hardship for some of our senior citizens and we think that the government needs to take action immediately by following the example set by the Government of Alberta.”

“We have met with government regulators but all they are willing to do is review the issue on a case-by-case basis and without offering much relief,” said Satanove. “In Alberta the government responded by suspending this regulation for three years,” noted Satanove, “and we are asking the government of BC to do exactly the same thing and use the time to engage in some proper consultation with both industry and pension groups.”
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For further information please contact:

Harry Satanove Harvey Mason Mike Geoghegan Dave Beatty
(604) 323-9363 (604) 299-7482 (250) 881-0969 (604) 709-3008

Pension Legislation backgrounder for the media

Backgrounder for Media

November 9, 2006

The Issue
Current pension legislation requires that every pension plan be prepared to terminate at any moment (referred to as the “solvency rules.”) This means that many pension plans are required to set aside a portion of the employer contribution to fund the extra costs incurred on a plan termination that no one expects to happen.

In theory pension plans can terminate at any time. However, especially with multi-employer plans, it is very improbable. For the pension funds associated with the construction industry to fail, the entire construction industry would have to be in a state of collapse, which would mean essentially that the province itself had come to a complete grinding halt.

Because many pension plans are in industries that can reasonably be expected to continue long into the future, extra contributions to fund their wind-up serve no purpose except to reduce the value of the negotiated wage and benefit package.

The provincial government recently announced it has over $100 billion worth of construction projects slated for the next few years. Labour wages represent approximately half of this cost. It is conservatively estimated that the current pension fund rules will increase pension costs by $1.00 to $2.00 per hour over the next two to three years for many people working in the construction industry. We conservatively estimate that the cost of this pension fund regulation will be at least $1 billion.

Because the wage and benefit costs, including the pension funding, have already been fixed in contracts, the additional costs imposed by the solvency rules can only be funded by reducing benefits – both future pensions for current workers and in some cases pensions in pay for retired workers. Thus rules that are meant to protect workers and pensioners are actually damaging them, to the benefit of no one. To the extent that members have wage and benefit expectations, pension solvency contributions only add to the cost pressures in the wage and benefit package.

In response to similar concerns the government of Alberta recently allowed a three-year suspension on solvency funding. Given that Alberta and BC’s legislation in this area is almost identical, a three-year suspension can and should be enacted here in BC with the added caveat that this time be used to consult with the affected industry and pensioner groups.

It should be clearly stated that at-risk pension plans do need this protection, and benefit from the current rules, as was the clear intention when these rules were implemented. Rules exist to protect all pension plans.

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Plans that are not at risk do not need this protection, and should not be required to set aside these contributions. This requirement puts excess costs and pressure onto these well funded and stable plans. This forces business to divert much needed capital away from more productive use of their resources, depriving the economy of much needed reinvestment.

Harry Satanove has met with BC government regulators who have said they are willing to review each pension plan on a case-by-case basis. However the relief that the regulator might offer under current guidelines will not be sufficient in most cases. In the meantime these funds will still be obligated to collect these additional funds.

A three-year suspension, as Alberta has enacted would take significant cost pressures off BC employers and help protect pensioners, some of whom have already had their pensions rolled back by 10% to 25%. In some cases, the pensions were reduced solely because of the solvency rules. By other funding standards to which pension plans must comply, the pension plans were adequately funded.

A three-year suspension of the solvency rules poses no negative or adverse effects from either a political point of view or from the perspective of good public policy. Indeed, there are solid economic reasons for proceeding with a three-year suspension - as Alberta has done - while pension fund solvency regulations are reviewed as the current regulations are artificially driving up construction costs and acting as a drag on economic growth.

Further government inaction will hurt the BC economy and lead to more pension reductions for retired workers.

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Friday, November 03, 2006

Vindication

It happened about three years too late, but I did finally receive some much appreciated vindication from Columnist Jody Patterson. In today's edition of the Victoria Times-Colonist, Patterson was writing about Norm's now infamous use of the word "bitch" to describe Belinda Stronach.

Jody made an excellent point about keeping "inside voices inside." But later on in the column she went on to write the following about me:

"When one-time politico Mike Geoghegan mused in 2003 about B.C. MLA Jenny Kwan's race and looks as factors in her getting elected, those who knew Geoghegan understood that he didn't really mean it to come out that way."

Thank you Jody and for the record even though I do disagree with Spector's comment about Stronach I do defend on the grounds of free speech his right to say it.

Wednesday, November 01, 2006

The revenge of God and the end of the age of reason

Reason versus religion. It’s a debate that has been going on ever since people tried to look beyond theology to try and figure out what was going on in the world around them.

The Age of Reason, or Enlightenment started in Europe in the 17th century and really took off in the 18th century. It helped give rise to scientific invention, a flourishing of the arts and commerce, and modern democracy itself. But as our world has rapidly advanced, it has grown ever more complicated and in so doing it has caused more and more people to turn back to religion to help make sense of our increasingly complex modern world.

Whether it be under the guise of reason or religion, fanatics will often try and exploit our desire for simple solutions to complicated problems. In the 20th century communism was responsible for the deaths of over 100 million people, mostly through starvation. Fascism probably killed another 50 million people before both were consigned to the trash bin of history.

But religious fanaticism has always been a force to be reckoned with. Whether it was Catholics and Protestants killing each other in Northern Ireland, or Shias and Sunnis killing each other in Iraq, sectarian violence has been an all too common occurrence in modern world events.

However it was in the 18th century, during full flower of the enlightenment, that the United States of America came into being. Far from wanting a theocracy, the founding fathers of our neighbour to the south were well aware of the harm that comes from not separating church and state. Thomas Jefferson spoke of the need to build “a wall of separation between church and state.”

Ben Franklin wrote, “A man compounded of law and gospel is able to cheat a whole country with his religion and then destroy them under color of law.” While James Madison said, “Religious bondage shackles and debilitates the mind and unfits it for every noble enterprise.”

Yet increasingly people who not that many decades ago would have been dismissed as religious crackpots now hold great sway over the American political landscape. In Richard Nixon’s time foreign policy based on trying to set in motion the conditions for the apocalypse and the second coming of Jesus Christ would have been regarded as sheer madness.

Though to be fair to the current George W. Bush administration, it should be kept in mind that there have been other world leaders who put great faith (pun intended) in the Old Testament in terms of setting foreign policy. In fact it was Protestant British Prime Minister Lloyd George, along with key members of his cabinet, who set about after the end of the First World War to (re) establish the state of Israel.

As both Lloyd George and George W. Bush believed based on the writings of the Old Testament, without a state of Israel there could be no Armageddon and hence no second coming of Jesus. Hence the need to create and maintain the State of Israel and the inevitable backlash this helped create against the West in much of the predominantly Muslim Middle East.

But it was not just the creation of the State of Israel that got most Muslim leaders up in arms. After the overthrow of the Shah of Iran, Ayatollah Khomeini returned from exile in France in 1979, to impose strict sharia law on an Iran he felt had been corrupted by contact with the West.

As religious issues have come to hold increasing sway over recent world events, some have started to see this as the end of the age of reason. Some have even taken to naming this new era of religious conflict as “The Revenge of God.” I prefer to see things in less apocalyptic terms.

Notwithstanding their more religious leanings a majority of Americans now seem to understand that American foreign policy under the Bush administration has been nothing short of disastrous. Secondly if one looks at a nation like Iran you will find a people that are perhaps the most pro-western of any people in the Middle East living outside of Israel. There is nothing like living under a repressive religious theocracy to make people truly appreciate the freedom that comes with living in a democratic secular state.

Yes world events will continue to remain complicated messy affairs, as all human endeavours inevitably are, but I still think the overall trajectory of human events is on the upswing. In other words these are not the worst of times human society is living in, these are still the best of times and I expect the future will be for the most part, even better.

(For a truly inspiring example of one woman’s courage in speaking out to help make our world a better place click here).

However for those desiring an even simpler philosophy to help get them through these troubled times let me quote Ricky’s Dad Ray from the Canadian Television series Trailer Park Boys:
“Boys, sometimes that’s the way she goes. Sometimes she goes, sometimes she doesn’t cause that’s the way she goes.”

Mike Geoghegan is a consultant and business executive living in Victoria, BC. Although he has now been happily married for over a decade, he has been in relationships with women who were Agnostic, Buddhist, Christian (both Protestant and Catholic), Jewish, Muslim and Sikh.