A new trust fund being proposed by the Communications, Energy & Paperworkers Union of Canada and AbitibiBowater—to replace the existing pension fund pool for mill workers and help take some of the strain off the company as it undergoes restructuring under bankruptcy protection—is drawing mixed reactions here.
Some union members are livid about the plan, including Ernie Cousineau, who has worked for the mill for 35 years and has been the pension rep for CEP Local 306 for the past 16 years.
Cousineau said the pension fund for the Fort Frances and Kenora CEP members, which always has been invested separately from Abitibi’s other pension funds, is in good shape—and that their pensions shouldn’t be risked in a new trust fund meant to pay for a shortfall in the Quebec pension plan.
The current pension fund pool, which includes about 16,000 Abitibi employees, is estimated to be $1.3 billion short of the $4 billion-plus it should have in it, but Cousineau said local union members are being told to make up for a shortfall they shouldn’t be.
“The money CEP wants to take out is to pay for the Quebec plans,” he noted. “They are underfunded by $1.2 billion.
“This action puts every worker’s pension in Fort Frances and Kenora in jeopardy,” Cousineau warned.
“They want to steal our right to retire with a pension,” he charged.
Cousineau reiterated the local pension fund, which includes about 1,440 CEP members in Fort Frances and Kenora, is in good shape.
In 2008, for instance, it had assets of $372,800,000, was 91 percent funded on an ongoing basis, and $19 million ahead for a windup.
“That was one of the best funded pensions in Canada,” he remarked.
“In 2005, we made a profit of $42,400,000. In 2006 we made $45,481,000.
“You can see by these numbers the plan is doing fine,” he later added.
Referring to two meetings held here last Tuesday, at which CEP administrative vice-president Kim Ginter spoke to the local CEP membership, Cousineau said Ginter told members the pension fund here was $100 million short.
But he feels that’s not possible since the local pension plan is split into 70 percent bonds and 30 percent mutual funds. To lose $100 million would mean that entirety of the 30 percent mutual funds was lost on the stock market.
Cousineau also is worried by the fact the CEP has never said how much of the local pension fund would be put into the new trust fund and what would be left alone.
“Would you trust someone with your bank account?” he asked.
Before the proposed trust fund can become a reality, it must be approved by the Ontario, Quebec, and federal governments, not only to “backstop” the trust but to waive some of the laws that pertain to the Pension Act.
“There must be a reason why the government put [the laws] in—to protect us,” Cousineau stressed.
Cousineau admitted that if the proposed trust fund goes through, he only has three years until retirement and probably will be all right. But he worries about the next generation.
If, for example, half of the money in the local pension fund was put into the new trust, and the mill here was sold to another company, that company could close out the current pension plan and go with a new, less stable one, leaving mill workers who haven’t yet retired with only 50 percent of their pension.
“If a new company comes along and closes out the pension plan, they are not going to put any more into it,” Cousineau argued. “We’re 50 percent short, so the guys who got 10-12 years left are not going to have enough time to make money in the new pension plan.”
But CEP Local 92 president George Chabot said it looks like the proposed plan is the only option.
“Myself, I think it’s a good thing because how can trying to get 25 percent more of your pension be a bad thing?” Chabot said yesterday, though stressing he only was speaking for himself and not any other union members.
“To me, it’s looks positive and they should go ahead with it, and we should move ahead,” he added. “There’s no other options out there.
“The thing is, nobody’s come up with a better plan.
“People that are retired now are expecting a full pension and I think this is one way we can get it for them, or come close to it,” Chabot added.
“We have to understand that these are different times,” he stressed.
As reported in Thursday’s Daily Bulletin, the plan was announced at a series of CEP membership meetings last week, including a pair held last Tuesday at the Townshend Theatre, which attracted more than 400 retirees and active members.
According to Ginter, the new trust would put the money into the stock market, with assurance from higher levels of government to “backstop it” if in 10-15 years the market doesn’t prove strong enough to pay pensioners 100 percent of what they’re owed.
“What we’re looking at is creating a trust and moving the money that is destined for people who are currently retired into the trust and having the government oversee it,” he explained.
“We figure that with the amount of money that’s moved, and the government actively managing it, like they would CPP, it would create enough money to support the pension payments that are out there to 100 percent,” Ginter added.
“What we need is the Ontario government and the Quebec government, because that’s where the plans are registered, we would need them to give us a waiver on some of the laws that pertain to the Pension Act,” he noted.
“If they do that, then we would also need their agreement that it get moved over to the trust and they oversee it.
“And if enough interest was created on the money, as soon as it was funded to the point of 100 percent, which we feel it could be, then they could wind it up, create annuities, and pay everybody.
“And then it would be over.
“If there was a shortfall down the road, we would be asking the government to backstop it, but we don’t feel there would a shortfall,” Ginter stressed.
“With the amount of money that’s involved—we haven’t dotted ‘i’s’ and crossed the ‘t’s’ so we don’t know the exact amount, but there’s $4.4 billion there, which is a lot of money—we feel that it’s around 77-80 percent funded, and it could create enough interest to support payments of 100 percent.”
Ginter said if the fund gained six-seven percent, it probably would be enough to support pensioners but currently under regulations, only a 4.5 percent formula can be used to calculate a solvency base.
Ginter reiterated that for the plan to become a reality, the Ontario, Quebec, and federal governments all have to be on board. At CEP meetings with the two provinces, they seemed receptive.
“They didn’t say yes, they didn’t say no. They’re going to go away and analyze it,” he noted. “We haven’t heard back yet whether it’s positive or negative.”
Ginter noted the federal government hasn’t responded yet to CEP at all.
“We’re patiently waiting,” he remarked. “There’s a lot at stake and they shouldn’t be sitting on their hands. They should at least meet with us as quick as possible so we can hand our plan to them and they can start to evaluate it.
“Currently, there’s been no response from them [Ottawa] at all.”
As previously reported, labour negotiations between CEP and AbitibiBowater were suspended the last week of October until the union secures a commitment from governments to help with the pension and restructuring issues.
“If we don’t resolve this part of it, we will not be negotiating with Abitibi,” stressed Ginter.
“Under the Quebec rules, for one thing, you can’t do anything to pensioners’ pensions—you can’t touch it,” he noted. “So we can’t do anything with the company on that.
“If we don’t fix the shortfall, there’s no use negotiating anything with the company because the creditors will move ahead with the debt that’s laden upon the pension plan,” he warned.