October 1st, 2019
Sisters and Brothers,
Here we are, at the place we all wished we would never get to, impasse. We all tried to convince ourselves that in a time of massive record profits, we would and should be able to get a contract settled. Deep down inside we all knew this is where we would be.
Your Bargaining Committee has listened to the Company about their pension concerns, and we have pushed back and explained why a forced pension switch is not fair or reasonable. We have indicated that there may be people who would be willing to switch to a DC pension, but that decision to switch must be up to the individual.
But it’s not just about pension, the Company has demanded we go backwards in several key areas. We have broken down some of the Company’s points of why they feel we need to accept double digit concessions.
The Company says that times are good right now but when times are not as good, we will need to compete with others in the industry and if we are paying more for Labour we will not be sustainable.
Last round of bargaining we gave them an end to the DB Pension. The cost of our benefits is dropping every year, just like most workplaces in the industry. The truth is that most workplaces have closed off the DB pension to new members, but in most cases a move for DB pensioners to a DC plan was voluntary and to this day there is still people on the DB Plan. In the 4 other refineries they compare us to they all have legacy DB people. Those switches happened anywhere from 1 year to 25 years ago, so the others in the industry benefit costs have been dropping for decades.
The latest actuarial completed for the end of 2018 has the pension plan over 90% funded and with it closed to new hires, and every year we get more and more sustainable.
The Company says now is a good time to make the switch because we are making record profits and a switch is better to happen when you can afford to do it properly.
We should ask the Managers if the Company has properly compensated them for the switch. The reality is the Company is not offering any money that is not in the Pension Fund. The Retirement Allowance (RA) that they are offering to make up for the bridge of retiring early is money that is already in the fund but not being offered until the members are at their unreduced retirement date (URD). This is already your money! But they are wanting to hold it back. This money is not guaranteed because it is not getting paid upfront. The Company is saving $78,000,000 by not paying out the RA until a later date. The switch is not fair and is going to hurt families that were planning their retirement with a DB Plan. Making up the difference of losing 8% on the Pension Plan (18% DB funding to 10% DC funding) and assuming the risk of the pension and having to pay 4% into the Pension Plan and losing 6.5% on the Savings Plan, will not be easy and will drastically change your perception of retirement.
The Company is proposing to eliminate our Pension and Savings Plan. The Company has used allot of terms and graphics to try and convince us that we need to move to a DC Plan. They talked about benchmarking with other workplaces to see where we are compared to the rest. They also told us that with our benefits we are at the very top of the scale.
Benchmarking is a way to compare us to the average of a whole bunch of workplaces. Really if everyone that is above the average is asked to rollback to the average, this will only lower the average. Has anyone heard about the race to the bottom? Let’s not kid ourselves, the Companies currently below the average are not offering gains to come up to the average. The reality is we made $2.2 billion in profits over the course of the last agreement and every year our costs are dropping as people retire from the DB and the new people are hired on the DC.
The Company says the industry has DC Pensions and the pension the company is offering is comparable.
We have talked to our Sisters and Brothers in other refineries and this statement is not false, but they are leaving out the part that there are still people on the DB plan from the day they were hired. Yes, some of the plants have switched to a DC plan, but some places have switched to different DB plans, but in most situations the DB people were grandfathered and allowed to stay on the DB plan. Commonly referred to as ‘Legacy Plans’.
The Company has showed us graphs on the funding on our pension. The regular pension payments are around $15 Million. The graph also showed hypothetical special payments of $40 million.
They showed extra payments in the next 10 years. These extra payments are hypothetical payments if the solvency of the plan is underfunded. If we look at history of the underfunding it is an issue that has been just in the last 10 years. There is many of factors that come into play, including change in valuation predictors, market crash and volatility, stopping the purchase of annuities. When the fund becomes fully funded our benefits are right inline with the industry.
The truth is that when markets crash it hurts the funding requirement, just the same as when markets are good the Company must take holidays if they have too much money in the Plan. The difference in plans is who takes on the risk of the volatility.
The Company walked us through how they switched the Managers to the DC plan and gave us hypothetical examples of numbers. The projection forward has members earning 6% interest on the money in the DC Plan.
The interest rate of 6% will give you numbers in the DC plan that look like respectable numbers. This rate will not only have to be maintained while you are working but also into retirement. Any market crashes will directly affect how you retire. If the DB plan could count on 6% interest rates, there would be no underfunding and would probably be in surplus. The difference is on a DC plan the risk is all on the employee and on the DB plan the risk is on the employer. The employer is asking you to take on risk, the risk is being shifted onto you, when you already assume the risk operating and working in a dangerous environment.
What happens if a 2008-like financial crash happens again? The CSS pension (DC) lost 20% that year. If that was your year to retire you are just plain out of luck. Your retirement savings are partially wiped out, but the corporation is still operating. They are still selling gasoline, the are still making diesel, they are still profiting a billion dollars a year, but you may need to work for another 5 or maybe even 10 years to make up the loss.
The Company says the offer of 11.75% over 4 years and the transition to the DC plan is more than fair.
The Company already has an end to the pension. An offer of 11.75% is what the National Energy Pattern is. Our wages on average are what is in other plants across Canada. The Company is offering you 11.75% over 4 years with one hand and taking upwards of 18% a year out of your pocket with the other. Some people may think that we are being dramatic when we say this offer will drastically change our lives and retirement plan, but the reality is that it will drastically change all of our lives and our retirement plans. Depending on your years of service and age, you may not have enough time to make up for the change in pension, and that risk is all on you and your family. Having to work longer would drastically changing many people’s life plans, and for those of you who believe us to be dramatic, perhaps you should come talk to any Bargaining Committee member in person and we can explain further how this will affect us all.
All of Regina should know that the lowest rate for a union member working at the Coop Refinery is almost 30/hour, the top rate is 56.18 per hour. Workers get double time for overtime.
The rates for oil workers are for the majority close to the same right across Canada. We are on average in the middle of that pack. It is our union brothers and sisters who work out in the dangerous units.
Currently the Company is choosing to operate with a management heavy employee ratio. There is 1 manager for every 2 unionized employees.
Many managers make over $186,000 per year, and up to $306,000 per year. Their bonuses can reach up to 20% of yearly salary. Some of their refineries top managers make a yearly bonus of $61,279 dollars per year!
All of Regina should know how much the managers make. Are they greedy? The median total income in Regina is $42,661 per year, and refinery managers make anywhere from four-and-a-half times to seven-and-a-half times the average salary in Regina.
If the Company were falling on hard times, there is room to cut at the top!
So, we invite you to learn more about the issues and ask questions by staying informed through our social media, website #SupportUnifor594and email communications. Knowledge is power that you can use as a tool to challenge misinformation in the workplace!
Your Unifor 594 Bargaining Committee