Proposed pension reform sparks protest

Municipal workers in Quebec defy plan for defined plans

Protests erupted province-wide after the Quebec government made moves to reform municipal pension plans.

The recently tabled Bill 3 — officially titled An Act to Foster the Financial Health and Sustainability of Municipal Defined Benefit Pension Plans — proposes significant changes to the way defined benefit pension plans are administered at the municipal level, in an effort to make up for massive deficits.

Quebec’s current shortfall reportedly stands at nearly $4 billion.

The proposed reforms would see municipalities and employees splitting pension contributions 50-50 and could result in the interruption of indexed pension increases. As many as 50,000 retired workers could be affected, yielding as much as $1 billion in new money annually.

While the Quebec Federation of Municipalities is remaining neutral on the proposal — federation president Richard Lehoux called the plan a "measured approach that favours inter-generational equity" — labour groups across the province have rejected the reforms.

Eighty Montreal firefighters chose to take early retirement only hours after the bill was tabled before the National Assembly on June 12. The en masse exit — partially a protest over the proposed reforms — was also an attempt to protect their pensions.

"It’s terrible because some of them had been there for 30 years and now they have to make this decision in three hours," said Marc Ranger, spokesperson for the Trade Union Coalition for Free Negotiation. "And it’s a decision that is costing the City of Montreal more than $4.5 million a year. Because all these workers are now taking their pension when they could have continued to work, contributing to the pension plan. When legislation is poorly written it can create a lot of insecurities. This was the case with the firefighters."

Further protests were held across the province. Transit drivers stopped buses in their tracks, fire trucks sprayed down city halls and police officers flashed the lights of their cruisers while blocking roadways.

On June 17, hundreds of city employees gathered outside Montreal City Hall waving black flags and several individuals started a bonfire in the street. Unions have been warned these protests opened the door to city reprisals.

But Ranger said the province’s labour movement has no intention of backing down.

"We are going to do everything in our power to defeat this," he said. "We will have to be careful not to jeopardize services to citizens, but we’re going to apply a lot of pressure.
Everything is on the table, even actions that could lead us to move on strike. We are mad. Our members are on the path of war. We started mobilization and it’s only going to grow."

Ranger said labour groups are doubtful the province’s promises of negotiations will amount to anything of substance. The conditions under which unions will have to negotiate are already being set, something he calls unacceptable.

Most frustrating of all, Ranger said, is the fact that all municipal workers are being subject to the same restrictions. The coalition represents more than 65,000 municipal workers across Quebec with more than 170 pension plans. While Ranger admitted some of the plans are under pressure and need adjustment, many are in good shape.

"For us, the wall-to-wall approach is very dangerous," he said. "Don’t give us a framework that is too tight, that doesn’t give us the chance to find creative solutions. This legislation is so extreme, the government has painted itself into a corner and we’re afraid they won’t budge. The space to negotiate is so small — we’re asking the government to give us the space we need to find our own solutions."

The coalition has made it clear it is willing to compromise, but the protection of retirees is non-negotiable. If the government is unwilling to make drastic changes to the legislation as it currently stands, it will be in for a fight, Ranger said.

But it might be a losing fight, according to Bernard Dussault. A pension and benefits officer for the Professional Institute of the Public Service of Canada and former chief actuary of the Canada Pension Plan, he feared the power of politics means Bill 3 is likely to be adapted as proposed.

"Obviously, something needs to be done to address the deficit," Dussault said. "But there are features of this bill which are not fair and make no sense. I don’t make a case for unions or for employers, I make a case for common sense."

The very nature of a defined benefit pension plan should protect retirees from being forced to contribute to the financial rules of the plan that emerge after they retire, he said, adding that retirees are only facing delayed indexed pension increases because the financing of municipal pension plans has not been done on a disciplined basis.

"The deficit should be amortized over a number of years," Dussault said. "Over the years, surpluses will emerge that help in paying against the deficit. That’s the way to go. And in the future, any surplus should not be taken as a contribution."

The wall-to-wall reforms currently proposed by the provincial government are not ideal, according to Dussault. He said the only thing that should be applied wall-to-wall is discipline in the financing of the plan.

Reviews should be done every year, and the contribution rate should be revised as necessary.

"This is very simple, but it’s never been done," Dussault said. "If it had, we would not be in the situation we are in today."

As it stands today, municipal workers appear to be prepared for a long fight against the proposed pension reforms.

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