It’s going to be a miserable new year for many BC pensioners, particularily those who are retired workers in the BC construction industry. Many of them face the prospect of having their pension income cut by 15% all because of a pension solvency rule that ironically enough was designed to help them and is instead hurting them.
In 1996 pension solvency rules were re-interpreted to not only cover the usual ups and downs in the business cycle but to also cover the prospect of a pension plan being wound up. This makes sense if your pension plan is linked to only one company, say Air Canada. It makes much less sense when your pension is a multi-eployer plan linked to an entire industry like the BC construction sector.
The impact of this re-interpretation was immediate, many retired contruction workers have not received any increase in their pension income over the last ten years. Now with continued government inaction, they now face the prospect of having their pension incomes cut by an average of 15 per cent.
Some pensioners have already had this happen to them. Rod Crowe is a retired ironworker from the Lower Mainland. His pension was reduced 15% in 2005. If not for these solvency rules he would have instead received an increase in his pension income.
Now for the ironworkers’ pension plan to come to an end would pretty much require the collapse of the entire BC economy. The ironworkers have been around for one hundred years and unless BC ends up going the way of Afghanistan it will be around for centuries more to come.
But come the New Year there will be many more pensioners like Rod Crowe because BC unlike many other jurisdictions in Canada has refused to take a serious look at the issue. The Minister of Finance, Carole Taylor, is taking direction from her officials on this file. Her ministry officials have offered to review the situation on a case-by-case basis, which is a completely inadequate response.
On November 9, 2006 the government of Ontario announced it was launching a comprehensive review of its pension fund legislation. On November 7, 2006 the federal government released its Solvency Funding Relief Regulations. After Alberta, New Brunswick and Québec, the federal government is the latest jurisdiction to respond to the serious funding challenges faced by sponsors of defined benefit pension plans.
As usual the government that was the most pro-active on this issue was Alberta. On August 10, 2006, the Employment Pension Plans Act and Regulation was amended to permit specified multi-employer pension plans to temporarily suspend solvency special payments for a three year period.
Pension fund consultants, Harvey Mason of D.A. Townley and Associates, and Harry Satanove, an actuary at Satanove & Flood Consulting, have called on the government here in British Columbia to do exactly the same thing. They then want this three-year period to be used to consult with pensioners, employers and workers.
I myself have spoken directly with Finance Minister Carole Taylor on this issue. She and her ministry officials seem unwilling to follow the example set by the federal government and four other provinces until there is a hue and cry from those affected.
This is a completely bizarre response given the fact that BC has more than its fair share of pensioners and given the fact we have perhaps more in the way of multi-employer pension plans than any other province in Canada.
So if you are a pensioner and you do find yourself facing a 15% cut in your pension benefits, don’t suffer in silence. Let your MLA know, let your local media know and above all let Carole Taylor’s office know. Maybe then they will finally realize this is a matter worthy of their attention.
Mike Geoghegan is a government and media relations consultant living in Victoria, BC. He can be reached via his website at www.mgcltd.ca