Pension and other unresolved issues between Canada Post and the workers' union

TORONTO – Canada Post and the union representing some of its employees remain embroiled in a labour dispute.

The Crown corporation has issued a 72-hour lockout notice to the Canadian Union of Postal Workers (CUPW) as the two sides have yet to negotiate a deal.

Here is a look at some of the main issues on the table between the union and the postal service:

Pension plan dispute

Current employees belong to a defined benefit pension plan, which guarantees retirees a specific sum of money each year regardless of how the pension fund’s investments are faring. Canada Post must make up the difference for its former employees if the fund performs too poorly to deliver on the promised amounts.

The union wants the existing pension plan to remain as is for all its members and any future employees, said Mike Palecek, CUPW’s national president.

Canada Post has agreed not to change the pension plans of any employees already enrolled, but wants to offer a different pension plan for new employees.

New employees would belong to a defined contribution pension plan. Canada Post would pay a certain amount into each employee’s retirement plan, but the amount they receive upon retirement would be dependant on how well the investments performed.

Palecek said this option is a non-starter for the union, whose members equate this to selling out their future co-workers.

Canada Post’s pension plan by the numbers

Palacek says Canada Post’s pension plan is sustainable and should be able to include future hires. The plan had $21.9 billion of assets as of Dec. 31, 2015, following a 7.3 per cent return for the year, according to the plan’s 2015 report to members.

It has about 90,000 members, including almost 33,500 retirees to whom it paid out $880 million in benefits in 2015.

The plan has a $6.2 billion solvency deficit, which amounts to all the obligations Canada Post would have to pay out if the plan closed.

Palecek said that would be the equivalent of a bank calling a homeowner and asking them to pay the remainder of their mortgage immediately.

“You obviously wouldn’t be able to do that, but that doesn’t mean that you’re not able to make your regular payments and pay off your mortgage as planned,” he said.

Instead, he points to the plan’s $1.2 billion of going-concern surplus as proof of the plan’s overall health.

“The plan is well-managed. We’ve been able to get good returns,” said Jon Hamilton, a Canada Post spokesman. “But it’s not enough.”

He highlights the plan’s $28 billion in long-term liabilities and says the future security of the plan is a concern.

“To ignore the long-term issues is dangerous thinking,” said Hamilton. “It is putting the pension plan in jeopardy for the people that are in the plan.”

Rural and urban mail carrier divide

Unequal pay between rural and urban mail carriers is probably the union’s “biggest issue in this round of bargaining,” Palecek said.

The employees belong to two separate bargaining units and have separate collective agreements.

“We’re asking for pay equity,” he said, saying rural workers earn less.

Hamilton calls these claims “simply not true.”

Rural employees are compensated on a variable pay scale based on the amount of work within their route, he said, and some can out-earn their urban counterparts.

All employees would see a pay raise under Canada Post’s current proposal, he added.

Home delivery

The union is also demanding the return of door-to-door mail delivery, which started to be phased out last year. Canadians elected a government that promised to save door-to-door delivery, said Palecek, and that’s what the Liberals should do.

The federal government is undergoing a formal review of the Crown corporation to determine whether it should continue to cut home delivery, among other things.

Canada Post, the union and others are all participating in the discussions, said Hamilton.

“That’s where those discussions should be had — not at the bargaining table. We should be talking about wages, benefits and pension.”


Follow @AleksSagan on Twitter