Department of Finance changes solvency requirements, limits management compensation
After phasing out door-to-door delivery and hiking stamp prices, Canada Post’s pension obligations have been eased by the federal government.
The Crown corporation – which earlier this year projected a $1 billion pension shortfall – will get some relief now that the Department of Finance has announced changes to solvency requirements for the next four years. Management compensation will also be limited during that period.
“The regulations provide Canada Post with more time to pay off its significant pension deficit so that it can restructure its operations for long-term viability,” said Kevin Sorenson, minister of state (finance). “We believe these circumstances merit one-time transitional assistance. As part of Canada Post’s commitment to return to long-term viability, executive compensation will be restricted while the regulations remain in effect.”
Canada Post is currently tackling a pension plan deficit of $6.5 billion. Its financial challenges have been chalked up to the historical shift towards digital communications over letter mail, Sorenson noted.
Meanwhile, the Canadian Union of Postal Workers (CUPW) has vowed to fight the cutbacks to mail service (which could result in the elimination of up to 8,000 jobs), calling it a Band-Aid for a bullet wound.
“If this happens, it would be the end of an era for Canada Post,” said Denis Lemelin, national president of CUPW. “We recognize that Canada Post needs to change, but this is not the way. We are extremely concerned that these changes will send Canada Post into a downward spiral."