Newly formed Task Force on Pension Reform must look outside Alberta

    Labour rejects Alberta-B.C. Pension Plan Model

    EDMONTON, July 22 /CNW/ - The new federal-provincial task force on
pensions meets in Calgary today. The Alberta Federation of Labour is concerned
that the task force will not focus on real changes that protect people's
pensions and ensure adequate retirement income.
    "The Task Force has come to the wrong province to launch their
investigation if they're looking for the right answers on pension reform,"
says Nancy Furlong, Secretary Treasurer of the Alberta Federation of Labour.
"The Alberta and B.C. governments have been pointing us in the wrong
direction. Their proposed ABC Pension Plan is a meager supplemental program
that employers can simply opt out of and which shifts all the risks onto the
shoulders of individual Canadians. We've seen the terrible impact that
fluctuation on the global equity markets can have on such plans and on workers
and their families."
    The Alberta Federation of Labour's actuarial analysis of the ABC Pension
Plan has revealed striking flaws: the proposed plan, even when added to
existing benefits provided by CPP and OAS, would generate as little as 14 per
cent of pre-retirement income for individuals enrolled in the plan, which
falls far short of the recommended threshold of 70 per cent. Furthermore,
employers are allowed to opt out and even those who join the plan wouldn't be
required to match the contributions made by individual employees. Finally, the
ABC Plan would be a defined contribution plan, rather than a more secure
defined benefit plan. Defined contribution plans are more risky because the
value of the benefits can be significantly lower than expected, particularly
in economic downturns and periods of increased inflation.
    "Instead of simply sticking on a band-aid, like the ABC voluntary
supplemental plan which lures Canadians into a false sense of security, the
federal-provincial task force should commit to a significant expansion of the
Canadian Pension Plan. The CPP is easy to reform and improve and is available
to all Canadians," says Furlong.
    If the task force does consider plans to supplement the CPP, it should
insist that participation is mandatory. Otherwise, employers will continue to
simply opt out or cut back contributions.
    Improvements must also be made to protect private sector pensions. The
Alberta Federation of Labour calls on the task force to examine legislation
that will protect these plans and ensure that workers get what they bargained
for. In particular, legislation should include insurance that protects
Canadians from the fallout if their pension plans go bankrupt.
    The Alberta Federation of Labour believes that the task force should make
the pension reform debate public and open to all stakeholders, starting the
process with a national summit on pension reform.
    "It is high time that we take a good look at how to best provide
retirement income to Canadians. And what we need is a cohesive system, like
significant improvements to CPP that makes a guarantee to Canadians that they
won't face the prospect of living in poverty in their old age," says Furlong.
"The federal-provincial taskforce shouldn't be fooled by the ABC plan's
promises."

For further information: Nancy Furlong, AFL Secretary Treasurer @ (780)
483-3021 (office), [phone] (cell)