Op-ed – Cosy benefits at Canada Post: Time for taxpayers to strike

November 12, 2011

Chronicle Herald, Fredericton

Jun 28, 2011 

I read with interest the June 15 letter from the local CUPW union representative. It is unfortunate CUPW is suffering the same challenges as other government organizations that offer gold-plated pensions. Canada Post workers are rightly concerned about maintaining pensions and benefits that are out of control.

For Canada Post employees, the threat is even larger than for most government organizations. Being a Crown corporation subsidized by taxpayers, it has the responsibility of being managed in a profitable way. The largest challenge for Canada Post is that it is in a dying industry.

The key issues are pensions and benefits with increased job security. The union is worried about the future effect of plummeting revenue at Canada Post. The union wants to maintain current sick-leave provision, which allow workers to accumulate sick time so it can be used if they become seriously ill.

In the public sector, the best feature of these sick-time programs is that they are paid out at retirement as a lump sum. Going a few years without sick days adds up to a pretty big bonus. The current arrangement allows for 15 sick days per year, as well as family bereavement days and statutory holidays.

More abuse is heaped onto taxpayers when employees can use severance from sick time to “buy back” extra pension at about five cents on the dollar. Pension buybacks purchase service or “air time” for years not worked to increase the size of the annual pension for the 30 or so years of retirement.

A reduction in forced overtime is also one of the union issues. More overtime means fewer full-time employees. Union revenue is based on total employees and payroll. Canada Post paid out $3.9 billion in salaries last year. We estimate that union dues are around 1.5 per cent to two per cent of salary. This would amount to the union collecting in the range of $60 million a year. What do they do with this much money? Should there not be some disclosure? It’s required in the U.S. through Department of Labour union financial reports.

The union is demanding no reduction in starting wage for new hires, which currently stands at $23 per hour. Imagine that — a starting salary with the government, earning almost $50,000 per year. Add in another 40 per cent for benefits, and the cost for a new employee at Canada Post is about $65,000 per year.

Management wants to split the current contract into two parts, one for new employees and one for current employees. They are proposing extravagant benefits for even future employees. The package for new employees includes pensions and comprehensive health benefits for employees and retirees.

This is taxpayer abuse. The pension plan is already underfunded. At the end of 2010, the plan was short $3.22 billion to pay future liabilities and had funding of only 83 per cent. Employees are owed $2.8 billion in future employee benefits. These include retiree health care, sick days paid out and vacation time payouts as well.

In 2009, the profit at Canada Post was $281 million. Already, it owes its employees 10 years of profits in future benefits and pensions. There goes the union’s assertion of profits before people. It is more like profits before pensions.

The current schedule for vacation time is seven weeks per year. Management wants to cut it back to six weeks for new employees. The company wants to change pensions so that future employees are offered a fully indexed defined-benefit pension by age 60. The current pension starts as early as age 55 with a CPP offset fully paid at retirement. Why is it that regular Canadians take a hefty penalty for triggering CPP before age 65 when the public sector gets full pension, including an allowance for CPP, at age 55?

The process for the early CPP is called the bridge benefit, which is paid from the first day of retirement until 65 years of age. Move the retirement age to 65 — the same as the taxpayers funding Canada Post worker retirements.

The contract is not even touching the gold-plated benefits of current employees. It applies only to future employees. This means no changes to a fully indexed defined-benefit pension plan, comprehensive health benefits for employees and retirees, up to seven weeks of vacation leave annually with sick pay payouts which allow for service buybacks.

I think it is time for taxpayers to go on strike.

Bill Tufts is a public sector pension watchdog at Fair Pensions For All in Hamilton, Ont.


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