December 12, 2019
Co-op came to the bargaining table this year insisting all Refinery workers move to a DC pension plan.
Our position has been clear from the start. We want choice & protection to ensure pension security for every Co-op Refinery worker. Anything less would be an unnecessary concession.
Choice is about giving workers the option to stay on the Defined Benefit (DB) pension plan, as promised, or to switch to a Defined Contribution (DC) plan. After our hard no to everyone moving to a DC plan, Co-op eventually came around to letting existing DB plan members stay on that plan. The proposed DB version of that plan was only a gutted version of what we were promised in 2017, $2.5 billion dollars in profits ago,
“To be perfectly clear, every single employee who currently is in the defined benefits plan will remain in that plan from now until when they retire.”
That’s what Vic Huard said during our last contract negotiation. If the executive vice-president of Federated Co-operatives Ltd. lied about that, we have to wonder what else the Company is lying about.
Protection is about ensuring the terms of the DB pension don’t get gutted during every contract negotiation.
Most of the other refineries, that have been switching workers from DB to DC pension plans, have done so as we did during our 2016 contract negotiations: the DB plan became closed to new hires and those remaining in the DB stay on legacy plans. To this day, the other refineries to which we are compared, have workers on legacy DB pension plans.
The DB pension plan has been around since 1979. The Company has been fine with the set up of the DB plan, up until 2017. This is the first extreme attempt to gut the pension plan. Even during lean years, this plan has never hurt the company financially. Plus, along with the savings plan bargained that same year, these benefits have attracted the highly skilled and loyal workforce we have today.
We have offered to make changes to pension liabilities. The Company will only be happy if workers go backwards.
- Our concern is the special payments of the DB Pension. The liability is huge. We anticipate $200-$400 million over the next ten years in special payments costs over and above the service costs.
- Now is a great time to switch to a DC Pension because of the low-interest rate; a low-interest rate will result in a higher commuted value payout.
- These are common factors in DB pension plans.
- $2.5 billion in profits, in the last three years, means we can handle it. We made record profits even though we made extra Pension payments.
- Any shortfall is due to poor investment strategy and decision-making – nothing to do with workers.
- With the DC plan, the commuted value may be higher, but our overall pension is less… much less.
- Low-interest rates are what keep the DB plan underfunded.
- Predicting extra payments on the DB plan for 10 years should also mean predicting lower returns for the DC plan.
There is always enough to respect Refinery workers.
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