Duane Hicks
Communications, Energy & Paperworkers Union of Canada and AbitibiBowater are proposing a new trust fund to replace the existing pension fund pool, and take some of the strain off the company as it undergoes restructuring under bankruptcy creditor protection.
The plan is being announced at a series of CEP membership meetings this week, including a pair held here Tuesday at the Townshend Theatre, which saw more than 400 retirees and active members attend.
In simplest terms, the 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, CEP administrative vice-president Kim Ginter said this morning as he prepared for a meeting with an estimated 1,000 union members in Thunder Bay.
“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,” Ginter 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,” he 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,” Ginter noted.
“If they do that, then we would also need their agreement that it get moved over to the trust and they oversee it,” he continued.
“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.
Ginter stressed if there was a shortfall down the road, they would be asking the government to backstop it.
“But we don’t feel there would a shortfall,” he remarked. “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.
But for the plan to become a reality, Ginter said the Ontario, Quebec, and federal governments all have to be on board.
At CEP meetings with the two provinces last week, they seemed receptive.
“They didn’t say yes, they didn’t say no,” Ginter conceded. “They’re going to go away and analyze it.
“We haven’t heard back yet whether it’s positive or negative.”
Ginter added the federal government hasn’t responded yet to the CEP.
“We’re patiently waiting,” he noted. “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 at all.”
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 company’s pension and restructuring issues.
“If we don’t resolve this part of it, we will not be negotiating with Abitibi,” Ginter stressed. “Under the Quebec rules, for one thing, you can’t do anything to pensioners’ pensions—you can’t touch it.
“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.
Ginter said nearly every one of the roughly 700 people he’s talked to this week have been supportive of the plan.
“There’s very little opposition. There’s probably four individuals that were upset,” he noted.
“I’d say that 99 percent of the people were really supportive.”
