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February 25, 2014 - No. 19

Hands Off Alberta's Public Sector Pensions!
Defend the Pensions We Have! Fight for Pensions for All!

Step Up Resistance to
Attacks on Pensions

Hands Off Alberta's Public Sector Pensions!
Defend the Pensions We Have! Fight for Pensions for All!

Step Up Resistance to Attacks on Pensions - Peggy Morton
Denounce Redford Regime's Campaign Against Pensions
No to PC and Wildrose Wrecking of Pension Plans - Rita Soto
Labour Coalition on Pensions Responds to Auditor-General's Report
Key Quotes from Auditor-General's Report - Labour Coalition on Pensions
Funding Status of Pension Plans in 2013
Canadian Taxpayers Federation Plays Chicken Little with the People's Pensions

Coming Events
Rally for Retirement Security!

Hands Off Alberta's Public Sector Pensions!
Defend the Pensions We Have! Fight for Pensions for All!

Step Up Resistance to Attacks on Pensions

Security in retirement including pensions and modern and humane seniors' care is a right that belongs to all people. The attack on public sector pensions is part of the neo-liberal assault aimed at dragging all Canadians down instead of raising everyone up to defined-benefit pensions for all and guaranteed security in retirement.

Alberta's public sector pension plans, including the Local Authorities Pension Plan and the Public Service Pension Plan, cover more than 300,000 active and retired workers. The Redford government has announced changes to the public sector plans that would reduce benefits and threaten their sustainability. Workers and their collectives have immediately responded to defend the pensions they have by mobilizing themselves in actions right across the province. Town hall meetings have been taking place everywhere; a website called www.truthaboutalbertapensions.ca has been established to provide information; rallies are organized; thousands of letters have been sent to MLAs telling them to keep their hands off public sector workers' pensions; and workers are taking every opportunity to tell their MLAs that the proposed anti-pension legislation must be scrapped at once.

The Labour Coalition on Pensions has organized a rally in Edmonton for March 2 at 2:00 pm. Workers are coming from Calgary, Red Deer and Ft. McMurray as well as other cities and towns. Another rally is also planned for the following day at 4:00 pm, the day the spring session of the Legislature opens.

The announced government changes severely undermine the existing public sector defined-benefit pensions, threaten their future viability and cast a dark cloud over all pensions. The retrogressive changes are a direct attack on public sector workers and their Canadian standard of living, and an indirect attack on the right of all to defined-benefit pensions.

Public sector workers receive pensions in exchange for the important work and service they provide Canadians and the value they add to the economy and society. The government changes are part of the transfer of wealth away from social programs and the working class and even out of the economy altogether to concentrate wealth and power in the hands of the energy and other global monopolies.

The rich and their ruling elite heap scorn on retirees as a cost to society to justify looting workers' pensions and to deny the right of all to security in retirement. The mobilization to stop the Redford government's proposed legislation shows that workers have rejected the anti-pension hysteria and are putting forward their own pro-social agenda.

The Workers' Opposition fights for a pro-social solution to pensions, which is to defend and strengthen the defined-benefit pensions workers have and extend them to all to guarantee the right to security and dignified living conditions in retirement. This requires raising everyone up to government guaranteed defined-benefit pensions at a standard of living attained during their working lives.

This attack on the right to pensions is yet another relic from an earlier period of aristocratic class privilege that must be abolished from our thinking and social practice. The Workers' Opposition upholds the principle that the aim of a modern economy is to ensure that the actual producers participate in all aspects of economic and political life according to their ability, and in exchange for their work live in dignity from birth to passing away.

Security in retirement includes defined pensions and modern seniors' homes and care facilities as a right. To defend the pensions we have and fight for defined-benefit pensions for all requires that defined pensions must become a universal social program similar to universal health care delivered by government and funded in exchange for the value workers bring to the socialized economy and produce during their working lives. Canadians defend with passion the universal public health care they have and fight for its expansion. So too Canadians defend the defined benefit pensions they have and fight for pensions and security in retirement for all.

Defend the Pensions We Have! Fight for Pensions for All!
Hands off Public Sector Pensions!

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Denounce Redford Regime's Campaign
Against Pensions

The attack on public sector pensions is aimed not just at those particular pensions but at the right of all to pensions at a Canadian standard. To destroy or even weaken public sector defined-benefit pensions creates an atmosphere where all defined-benefit pensions are meant to appear as a utopian dream. This cannot pass!

The pension plan changes announced by Alberta Finance Minister Doug Horner imposing a two-tier pension system amongst other retrogressive measures would take effect in 2016 and affect all future service. Contribution rates of workers and employers will be capped, which will eventually weaken the pensions to the point of collapse. Workers will have to work longer before they can retire. They will no longer be able to retire with a full pension when combined years of service and age reach 85. Anyone retiring before the age of 65 will lose a much larger proportion of their pension for each year under 65. All future service will be capped so that the cost of living allowance (COLA) is targeted at 50 per cent and even that is conditional on the plan's funding instead of the existing guaranteed 60 per cent COLA. Workers will no longer stop paying into the fund once they surpass 35 years of service.

With the attack on public sector pensions in Alberta and at the federal level, the Redford and Harper governments want to stop any pro-social movement towards defined-benefit pensions for all, especially through modernizing and strengthening the Canada Pension Plan. The Workers' Opposition is determined to turn the momentum around in favour of the people and a pro-social agenda.

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No to PC and Wildrose Wrecking of Pension Plans

Public sector workers and their collectives are organizing militant resistance to the attacks on their right to live in security and dignity in retirement. In response, the PCs and Wildrose are trying to cover up where they are headed with regard to pensions and in this way try to break the solidarity of active and retired workers. The political parties representing the energy and other monopolies want workers to adopt the anti-social thinking of the owners of capital, which is narrowly fixated on growing their own wealth and power, and to turn their backs on the broad pro-social thinking and outlook of the modern working class. The modern working class outlook cares deeply about social solidarity, defence of the public interest, and solving problems facing the society.

Both the PCs and Wildrose aim to break the solidarity of workers and their unions extending across generations. The anti-social outlook demands each individual worker should look at the pension issue from the standpoint of "what's in it for me." In opposition, the modern outlook upholds the view that our security lies in the fight for the rights of all.

The PC government claims that even with its proposed retrogressive changes to their pensions, pensioners as well as workers who are close to retirement have nothing to worry about, because their pensions are guaranteed. It suggests that the defence of pensions is not their fight, as it mostly affects future generations, about which they should not be concerned.

This is pure deception. Without social solidarity across the generations, the working class and modern economy are weak prey for the rich predators. The essence of the government's proposals is to wreck the pension plans of all workers one retrogressive step at a time, hitting the youth and elderly with different levels of intensity to cause splits in their resistance.

The Pension Coalition points out, "The government's proposed plan cannot still be called a defined-benefit plan. The Plan benefit levels cannot be guaranteed, given that contribution rates are capped." If this plan is adopted, no public sector worker, active or retired can be assured of security and dignity in their retirement years.

Wildrose is playing coy, telling public sector workers, "The Wildrose supports sustainable pension plans and recognizes, as do the vast majority of provincial and municipal employees, that there may need to be some tweaks to what is offered future workers by way of pension benefits."

Wildrose uses the same playbook as the Harper government, using words to hide rather than explain where they are going. Contrast the above "mildRose" statement with the Wildrose "Budget 2013 Financial Recovery Plan" where it speaks like Chicken Little claiming the pension sky is falling.

Wildrose writes, "The reason why there are so few defined benefit plans in the private sector is because they are unsustainable with no flexibility to adjust to volatile market activity and a changing workforce. Unfortunately, the PC government has yet to learn this lesson which has resulted in Alberta now holding over $10 billion in unfunded pension liability across the public sector."

Chicken Little Wildrose calls for the destruction of defined-benefit pensions saying, "If the issue is not addressed early enough, major corporations and even national governments face financial ruin as more and more people turn 65 and start drawing from their defined benefit pensions."

Similar to the Redford government attacks on pensions, which is destroying them as defined-benefit pensions, Wildrose proposes, "New hires will be provided with defined contribution pension plans instead of defined benefit plans."

A defined contribution plan is a savings plan with no certainty of a pension from retirement until passing away. Wildrose and the PCs present the "I'm alright Jack" outlook as a means to attack the rights of all. Never mind about the next generation, they say. Forget about social solidarity and the seniors' responsibilities to the next generation and the youth's responsibilities to their elders.

A two-tier pension plan is designed to wreck the plan over time for all workers. Consider what would happen if all new workers were enrolled in a savings plan, not a defined-benefit pension plan. The "old" plan would have no new entrants. The ratio of retired workers in relation to active workers would continue to grow, while the plan would have no new funding to sustain it. Far from preventing a crisis in the plan's sustainability, such a move would guarantee a crisis. Further, as more and more public sector workers are not part of the same pension plan as the retirees, what stake would they have in defending it, especially when they are constantly bombarded with anti-social propaganda?

Social and union solidarity extends across generations, where all retired and active workers fight for the present and the future, for the well-being of all generations. Security and dignity in retirement is a right that belongs to all workers. Young and old, we are all one working class.

Defend the Pensions We Have!
Fight for Pensions for All!

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Labour Coalition on Pensions Responds to
Auditor-General's Report

Auditor-General's report provides evidence that Redford government
must scrap its pension changes

The Labour Coalition on Pensions has analyzed the report of the Alberta Auditor-General released February 13, and concludes that the report supports the argument that proposed changes to the plan are ill-advised. In fact, the Auditor-General writes, "[It is] unclear whether the proposed reforms significantly increase the likelihood of the plans' sustainability."

The Labour Coalition on Pensions issued a statement highlighting the following points made by the Auditor-General:

The Government of Alberta has not properly engaged plan stakeholders - the employees and employers who pay for the plans;

The government has not fully considered effects of the changes they are pushing through;

The government has not planned how any changes would actually be implemented;

The "hard cap" on pension contributions proposed by the government can in fact harm the plans' sustainability.

One proposed change to the pension legislation is to impose a "hard cap" on contributions. This means that the pension boards will not have the authority to set the pension contribution level based on what is required to keep the plans healthy and sustainable. The unions point out that this could well force the pension boards to cut pension benefits to retirees.

Further, the changes the government intends to impose will make pensions less attractive for part-time workers already struggling to make ends meet on less than full-time hours. Workers who will have to pay more for reduced pension benefits may well decide they cannot afford to participate in the pension plans.

The people should question why the government is engaged in pushing through changes to the pension plans, which are supported by neither the pension boards nor the unions that represent plan members. All the facts point to the conclusion that the government is intent not on stabilizing the pension plans but in wrecking them. This attack on the pensions of public sector workers has as its aim to drag all Canadians down to a level without defined-benefit pensions instead of raising everyone up to security in retirement.

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Key Quotes from Auditor-General's Report

The Labour Coalition on Pensions backgrounder provides key quotes from the report of Alberta's Auditor-General concerning changes the Redford government intends to introduce as legislation in the spring session of the legislature, which begins March 3.

- "It is therefore unclear whether the proposed reforms significantly increase the likelihood of the plans' sustainability." (Page 31)

- "If the defined benefit plans were changed to defined contribution plans, it would be more likely that employers would have to pay a much larger share of the current unfunded liabilities than they are currently paying under the existing joint funding model." (Page 17)

- "The financial health and design of Alberta's public-sector pension plans can affect the government's and other plan employers' ability to cost effectively deliver public services, attract and retain quality employees and provide a level of benefit security for plan members." (Page 18)

- "In September 2013 the government announced that it planned to put caps on the contribution rates. This is an example of a threshold that could be used to achieve clarity. However, the department also needs to ensure the plans to determine how these contribution rate caps will align with other plan attributes. For example, the plans will need to determine how these caps align with the objective of benefit security and investment policy." (Page 25)

- "One of the objectives was to ensure there was intergenerational fairness for members and taxpayers; however, we did not see how the analysis compared options considered against this principle." (Page 31)

- "The department's comparative analysis of proposed changes did not include feedback from stakeholders." (Page 31)

- "The department has not assessed the impact of the proposed plan changes on employee recruitment and retention." (Page 31)

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Funding Status of Pension Plans in 2013

A study of 461 pension plans in Canada, the U.S., Japan and Europe by ratings agency DBRS found the average funding level in 2012 had fallen to 78 per cent. DBRS considers funding levels under 80 per cent represent "a danger zone."

At the end of 2013, agencies described a very different picture. AON Hewitt, a global human resources consultancy, reported that the median solvency funded ratio in the AON Hewitt pension universe of 275 public, semi-public and private plans rose to 93.4 per cent on December 31, 2013. That figure represented a 5.7 percentage point improvement from September and was up nearly 25 percentage points from the beginning of 2013.

The Mercer Pension Health Index, which tracks the funded status of a hypothetical defined benefit pension plan, stood at 106 per cent on December 31, 2013 up from 82 per cent at the start of the year and at its highest level since June 2001. AON Hewitt's solvency funded ratio measures the financial health of a defined benefit pension plan by comparing the amount of assets to total pension liabilities in the event of a plan termination.

Almost 40 per cent of pension plans tracked by Mercer are now considered fully funded, compared to 6 per cent at the beginning of 2012. Only 6 per cent of plans are now less than 80 per cent funded, while at the beginning of 2013, 60 per cent were less than 80 per cent funded.

The studies show that the funding status of pension plans can fluctuate wildly from year to year based on interest rates and projections for investment returns.

(With files from the Financial Post)

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Canadian Taxpayers Federation Plays Chicken Little with the People's Pensions

The neo-liberal Harper front group the Canadian Taxpayers Federation (CFI) and other anti-think tanks of the rich keep on screaming that the sky is falling and disaster imminent unless workers are deprived of their defined-benefit pensions and forced to fend for themselves.

The anti-worker CFI leads the charge attacking the pensions of Alberta public sector workers stating, "[Alberta Finance Minister] Horner has decided that the province can no longer wait to tackle its insufficiently funded employee pension plans. Beset by people living longer, a lower ratio of contributors to recipients, and returns on investments that have not met expectations, the government's employee pension plans are now bleeding money with a $10.8 billion unfunded liability. In short, there is not enough money in these plans to meet their obligations.

"Union bosses claim that the financial hole in these pension plans will disappear within nine years without any changes at all to contribution rates or payouts. This is difficult to fathom, with government projections showing the unfunded liabilities continuing to increase in the next two years to $11.3 billion."

Contrary to CFI disinformation, the unfunded liability is amortized over a maximum 15 years, as required by law. Under current legislation, plan contribution rates can be adjusted to deal with any liability or surplus. Employees and employers contribute to the plan. Rate increases have been in place for some time and the level of the unfunded liability is decreasing. The Redford plan to cap rates, if implemented, could lead to problems for the pension funds, which would play into the CFI Chicken Little routine.

The CFI also makes a false claim that "there is not enough money in the plan to meet their obligations," suggesting that the plan is about to fail and will not be able to provide pensions. The calculation of the "unfunded liability" is based on a process known as a solvency valuation, which is a test based on the hypothetical situation that the plan is terminated on a certain date and all plan members are paid what would be fully owed to them to that point. The most common reason for such an occurrence is bankruptcy and destruction of the employer and firing of all workers, which in this case would be the Alberta government. What the CFI is trying to cover up is that based on a going concern valuation, which assumes the continuation of the plan with continued contributions of all plan members, the pension plan is estimated to have enough assets to pay future pension benefits.

The CFI covers up the negative impact on public sector pensions from the neo-liberal agenda of privatization and wrecking of public services, which it champions. Privatization of government services and deliberate staffing policies to deprive workers from becoming members of the pension plans through the use of contract work, casual and temporary jobs and low full-time equivalency part-time work, which is not pension eligible, have resulted in fewer active workers in the plans.

Alberta's population is growing at the highest rate of any province in Canada, and has increased by 50 per cent since 1992. This should have meant a healthy increase in public sector workers in relation to retirees. The ratio of active to retired members would be very different from what it now is if the CFI supported anti-social agenda had not ravaged the public service. Stopping and reversing this anti-social trend would have a very positive impact on the economy, including the status of public sector pension plans.

The CFI and similar anti-social agencies represent private global monopoly interests. They attack public sector pensions as part of an agenda to attack pensions for all. According to these neo-liberals, people are not born to society and are not in a positive relationship with it.

Contrary to the ravings of the CFI, the working class makes society and the socialized economy function. The existence of society and the socialized economy, on which the rich depend for their earthly paradise, requires the work of the working class. The working class works and guarantees the existence of society and the economy, and in return, the society and economy guarantee the well-being and security of workers from birth to passing away.

Not so, say the neo-liberals, who declare that the relationship is wholly one-sided, and society and the economy have no obligation or responsibility to guarantee the well-being and security of the working class. In their narrow outlook, the economy and society exist only to serve the rich and their claims, and the claims of the working class must be sacrificed for the benefit of the owners of capital.

The neo-liberals present security in retirement as an individual's responsibility through "savings" during their working years. If the savings fail to materialize for whatever reason, such as injury or illness, or turn to dust through the latest fraud and corruption and periodic economic crisis, this is no concern to the champions of the rich. After all, according to those whose heads are stuck in the medieval era, you are not born to society so let your feudal extended family or charity look after you.

Canadians cannot fend for themselves in an economy that is socialized in its essence, least of all in their senior years. Canadians produce and live collectively. Collective problems require collective solutions. CFI and their ilk represent the old, which is blocking Canadians from providing a new direction for the economy, solving the problems confronting society and moving it into the twenty-first century not backwards to the fifteenth.

The neo-liberals want to convince everyone that no alternative to wrecking and austerity is possible because a pro-social alternative does not favour owners of capital and private monopoly interests. The Workers' Opposition in contrast fights for a new direction based on affirming the rights of all and within this conscious fight for the new, the workers themselves are fashioning a pro-social agenda in which security in retirement is a major factor.

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Coming Events

Rally for Retirement Security!

Sunday, March 2 -- 2:00 pm
Churchill Square (99 Street and 102 Avenue)

The organizers state: "The Redford Government has proposed costly and irresponsible changes to your pension plan. Make your voice heard 2 p.m. on March 2 in Sir Winston Churchill Square.

"The Redford government's proposed cuts to public-sector pensions are unjustified, unfair and reckless. Let's fight back."

For more information: www.truthaboutalbertapensions.ca

Also note the following related events:

Pension Rally at Opening of Alberta Legislature

Monday, March 3 -- 4:00 pm

Rally at the Legislature on the opening of the spring sitting of the Legislature and the Throne Speech.

Worksite Day of Action

Thursday, March 20

Information walks over the lunch period at worksites, MLAs' offices or general meetings.

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