Canada Post likely will be locked out/on strike - July 2

[iggy_oi]

Originally Posted by Cecil Terwilliger

What adjustments do you think CUPW is going to support exactly? And by adjustments you mean reduction in payouts correct? Is there some other way to come up with $6B? Or do you think they'll support increases to their contributions with no increase in the pension payout?

They could look to increase employee contributions. That is an option. As for making up the $6billion, the existing pension had a $1billion surplus in 2015, now that is not guaranteed to continue, but it does show that the $6billion Gap could be closed on its own. Why not try to come up with some sort of safeguard rather than simply eliminate the plan all together? It just doesn't seem to me that going with what their proposal is the only way to fix the problem, infact their proposal seems to guarantee a deficit since less and less employees will be contributing to the old plan while more and more will be getting paid out from it.

[Resolute 14]

Once again, iggy_oi, we have numerous examples of defined benefit pension plans not fixing themselves. You are asking Canada Post to simply hope they somehow become one of the relatively few exceptions rather than take the same action most companies have to prevent history from repeating itself.

[iggy_oi]

Originally Posted by Resolute 14

Once again, iggy_oi, we have numerous examples of defined benefit pension plans not fixing themselves. You are asking Canada Post to simply hope they somehow become one of the relatively few exceptions rather than take the same action most companies have to prevent history from repeating itself.

I'm not saying they need to go with status quo, they can make adjustments, whether that be increased employee contributions or an agreement to not implement this new plan unless the current pension does not continue generating X amount in surplus. Also their current solution potentially puts them in an even worse spot.

[Kjesse]

Originally Posted by iggy_oi

I'm not saying they need to go with status quo, they can make adjustments, whether that be increased employee contributions or an agreement to not implement this new plan unless the current pension does not continue generating X amount in surplus. Also their current solution potentially puts them in an even worse spot.

The bolded part has zero liklihood, to the point of being funny.

I could see the union bosses now, "Hey workers, remember those CB's we've been in the last several decades guaranteeing us fixed pension payments based on our past contributions? Yeah, well, the investments they have made haven't panned out, and there's a shortfall, so now we're all going to volunteer to pay more, just to help the government along. We don't want any taxpayers paying for the agreement the government stupidly had with us all these decades."

That's rich.

[Resolute 14]

^Same with the "we'll just keep going until the plan starts losing money" proposal. (a) it's already losing money, even if one year showed a small surplus, and (b) the union will simply say "not our problem".

[V]

Increasing contributions isn't that ridiculous. My contribution rates have increased a number of times, it happens.

[CaptainCrunch]

Originally Posted by iggy_oi

They could look to increase employee contributions. That is an option. As for making up the $6billion, the existing pension had a $1billion surplus in 2015, now that is not guaranteed to continue, but it does show that the $6billion Gap could be closed on its own. Why not try to come up with some sort of safeguard rather than simply eliminate the plan all together? It just doesn't seem to me that going with what their proposal is the only way to fix the problem, infact their proposal seems to guarantee a deficit since less and less employees will be contributing to the old plan while more and more will be getting paid out from it.

Because it doesn't account for the aging work force issue that Canada is having. The losses will probably accelerate, when you show a one year profit on a pension plan, its not the sign of pension health, it might be a sign of less workers retiring, maybe because of the Conservative short increase in pension age.

What you're talking about is a hope and a prayer strategy, well we showed a profit this year, so double meats for everyone.

At the end of the day a pension with a 6 billion dollar deficit is more likely to collapse under its own weight then rebound.

[albertGQ]

So are they still delivering mail? I didn't receive anything Monday or Tuesday (didn't check yesterday)

[Resolute 14]

Yeah. Canada Post delayed the lockout a couple days in the hopes the union would agree to binding arbitration. That didn't happen, so I think Monday is now the day.

[Slava]

Originally Posted by V

I think you need to look at the pension in more than a snapshot in time to determine if it's viable long term. I'm sure the actuaries have done their work. I'm also sure the aging workforce is going to become a greater drain every year. I'm in a DB pension myself, so I hope mine is viable, but I sure wouldn't be surprised if my company made the same policy change in the near future.

One question I have, though, if the DB pension works by those paying in to support those who've retired, how does that work when you eliminate the DB for all new employees?

Originally Posted by Locke

The old employees' pension would likely have to stand on the growth of its current value of assets, which as pointed out are less than its' projected liabilities.

Basically they'd hope that the fund would achieve enough growth to cover the current deficit while not adding more potential pensioners ie. not allowing the liability to grow.

In truth though they'd just take the shortfall out of General Revenue to cover the difference. Thats the kicker about Government backed DB pensions, the difference will always come from somewhere.

This is mostly what happens, but the reality is that pension managers can adequately manage to these liabilities, and that isn't usually the issue. The issue for a lot of companies or entities providing these guarantees is that they don't put the money in to begin with.

The other factor that gets missed from these discussions is that we're not talking about just a pension here forever (which is a bit insane if you really think about it, because companies are paying and receiving say 40 years of work from age 25-65, and paying income for that for roughly 70 years!)

You have to factor in that almost all of these plans, including CP although I haven't looked, includes health and dental coverage for that period as well. That's a big deal. I know on a board like this with demographics that are somewhat younger than say 75 that you might be inclined to think "Whats the big deal?" But from experience I can tell you that the medical/health costs get insane as we age. That's all part of the deal here.

[iggy_oi]

Originally Posted by Delgar

The bolded part has zero liklihood, to the point of being funny.

I could see the union bosses now, "Hey workers, remember those CB's we've been in the last several decades guaranteeing us fixed pension payments based on our past contributions? Yeah, well, the investments they have made haven't panned out, and there's a shortfall, so now we're all going to volunteer to pay more, just to help the government along. We don't want any taxpayers paying for the agreement the government stupidly had with us all these decades."

That's rich.

Yes that is exactly what their union will say if it is the only option. Will it go over well? Probably not, but I'm sure it would go over better than the possibility of not having anything left in the funds when some of those members retire. The tax payers won't necessarily cover the costs, Canada post could privatize and claim bankruptcy and then those people would be SOL. I don't know why you think it is laughable, this is something that comes up a lot when negotiating pensions.

Originally Posted by Resolute 14

^Same with the "we'll just keep going until the plan starts losing money" proposal. (a) it's already losing money, even if one year showed a small surplus, and (b) the union will simply say "not our problem".

I didn't say simply going with status quo, I spoke of putting in safeguards or agreed upon contingency plans. A) the plan was losing money, currently it's making money, no one can predict with certainty which way it will go. B) it will be there problem when some of this employees retire and there is nothing in the pension fund.

Originally Posted by CaptainCrunch

Because it doesn't account for the aging work force issue that Canada is having. The losses will probably accelerate, when you show a one year profit on a pension plan, its not the sign of pension health, it might be a sign of less workers retiring, maybe because of the Conservative short increase in pension age.

What you're talking about is a hope and a prayer strategy, well we showed a profit this year, so double meats for everyone.

At the end of the day a pension with a 6 billion dollar deficit is more likely to collapse under its own weight then rebound.

The strategy I mentioned was taking into account the risks associated with the current plan and putting in safe guards to protect it if the growth doesn't continue. Hope and prayer? No it's hope and plan, it could look like this, year 1 and 2, no increase in contributions, if the results were continued growth, continue with status quo, if it created a greater deficit, increase contributions at a set amount, after 2 years review the results, if the problem is getting fixed continue with this model, if things haven't improved, then maybe implement the new plan. It's a way both sides can get what they want without the all or nothing approach. Meeting in the middle, in other words come to a compromise, that's what collective bargaining usually requires after all.

At the end of the day eliminating contributions to a plan with an existing deficit is not going to help at all. If you think that the new plan members are going to accept contributing their dollars to a plan that will never benefit them I think that is wishful thinking. Ok so those employees don't have a say currently since they aren't employed yet, but when this contract expires you can bet money that those workers will fight tooth and nail to make sure they aren't paying for someone else's retirement at the expense of theirs.

[CaptainCrunch]

Originally Posted by iggy_oi

Yes that is exactly what their union will say if it is the only option. Will it go over well? Probably not, but I'm sure it would go over better than the possibility of not having anything left in the funds when some of those members retire. The tax payers won't necessarily cover the costs, Canada post could privatize and claim bankruptcy and then those people would be SOL. I don't know why you think it is laughable, this is something that comes up a lot when negotiating pensions.



I didn't say simply going with status quo, I spoke of putting in safeguards or agreed upon contingency plans. A) the plan was losing money, currently it's making money, no one can predict with certainty which way it will go. B) it will be there problem when some of this employees retire and there is nothing in the pension fund.



The strategy I mentioned was taking into account the risks associated with the current plan and putting in safe guards to protect it if the growth doesn't continue. Hope and prayer? No it's hope and plan, it could look like this, year 1 and 2, no increase in contributions, if the results were continued growth, continue with status quo, if it created a greater deficit, increase contributions at a set amount, after 2 years review the results, if the problem is getting fixed continue with this model, if things haven't improved, then maybe implement the new plan. It's a way both sides can get what they want without the all or nothing approach. Meeting in the middle, in other words come to a compromise, that's what collective bargaining usually requires after all.

At the end of the day eliminating contributions to a plan with an existing deficit is not going to help at all. If you think that the new plan members are going to accept contributing their dollars to a plan that will never benefit them I think that is wishful thinking. Ok so those employees don't have a say currently since they aren't employed yet, but when this contract expires you can bet money that those workers will fight tooth and nail to make sure they aren't paying for someone else's retirement at the expense of theirs.

I doubt unless the contributions go up to 100% of every employees paycheck that a 5 billion dollar debt is fixable. Last year looks like more of a fluke then anything else, so taking a wait and see attitude and adjusting after that will have serious consequences.

The very nature of the pension makes it collapsible. Why not jump on the problem right now and bump up the contributions, or accept that there's going to have to be a new pension plan for new employees that makes sense.

[Northendzone]

I am sure I read that very soon, Canada Post will have more retirees than active employees - which will make it even harder to fund the deficit

[Resolute 14]

Originally Posted by iggy_oi

I didn't say simply going with status quo, I spoke of putting in safeguards or agreed upon contingency plans. A) the plan was losing money, currently it's making money, no one can predict with certainty which way it will go. B) it will be there problem when some of this employees retire and there is nothing in the pension fund.

I don't see it, personally. I think the NHLPA and the last couple lockouts provide a good example.

In both 1994 and 2004, the NHL is telling the NHLPA that the spending imbalance simply can't continue. The NHLPA's response was blunt: "not our problem. You fix it yourself". Except, the very nature of the business was such that literally the only way to fix it would have been massive collusion. Opposite sides of the union debate that we are on, I think we both agree that would have been a very bad thing. And the NHLPA would rightfully have thrown a fit.

Ultimately, the only way for the NHL to take serious steps to address the issue was via the CBA, and it had to drag the union into it kicking and screaming.

Right now, Canada Post is saying we have a big spending imbalance, and the union is saying "not our problem". Personally, I think the conclusion is inevitable - the DB pension plan is going to go. The only question is when. Is Canada Post at the equivalent place the NHL was in 1994, where it knew it had a problem but wasn't yet ready to go nuclear to force the union to accept there is a problem? Or is it at the point of 2004, where it will do anything it needs to to start fixing the problem? The answer to that question will likely determine whether this is a short or a long lockout. Because even if the padlocks go up Monday, I don't see the CUPW taking the pension issue seriously for a long time yet.

[iggy_oi]

Originally Posted by CaptainCrunch

I doubt unless the contributions go up to 100% of every employees paycheck that a 5 billion dollar debt is fixable. Last year looks like more of a fluke then anything else, so taking a wait and see attitude and adjusting after that will have serious consequences.

The very nature of the pension makes it collapsible. Why not jump on the problem right now and bump up the contributions, or accept that there's going to have to be a new pension plan for new employees that makes sense.

Sticking with the facts, it could have a serious consequences, it could also fix itself, also I have no idea how you are taking what I'm suggesting as a wait and see approach. My example has a wait and see for the first two years, yes, but it actually has provisions to address a negative result. It was only an example, they could put increased contributions in today, implement an escrow or something of that nature. The point I'm trying to make is that their is likely a solution that doesn't involve simply axing this plan.

[Jacks]

Originally Posted by Resolute 14

The only question is when. Is Canada Post at the equivalent place the NHL was in 1994, where it knew it had a problem but wasn't yet ready to go nuclear to force the union to accept there is a problem? Or is it at the point of 2004, where it will do anything it needs to to start fixing the problem? The answer to that question will likely determine whether this is a short or a long lockout. Because even if the padlocks go up Monday, I don't see the CUPW taking the pension issue seriously for a long time yet.

I would guess that they are in this until they get the concessions. Every time they have one of these disruptions they lose a chunk of business that is never coming back. Even just the threat of a work stoppage is costing them dearly. They need to pull the band aid off now.

[Resolute 14]

Originally Posted by Jacks

I would guess that they are in this until they get the concessions. Every time they have one of these disruptions they lose a chunk of business that is never coming back. Even just the threat of a work stoppage is costing them dearly. They need to pull the band aid off now.

If it was private business, perhaps. But even as an arms-length Crown Corporation, Canada Post still knows that the government, and therefore the taxpayer, is ultimately on the hook. A dispute like this is one where both sides are playing with other people's money.

[Jacks]

Hopefully you're wrong but you're probably right.

[Locke]

Originally Posted by Jacks

Hopefully you're wrong but you're probably right.

Hes absolutely right.

[iggy_oi]

Originally Posted by Jacks

I would guess that they are in this until they get the concessions. Every time they have one of these disruptions they lose a chunk of business that is never coming back. Even just the threat of a work stoppage is costing them dearly. They need to pull the band aid off now.

Canada post owns purolator so while they are losing some business it is certainly not a complete loss