Province Has an Obligation to Protect Retirees, CAW Says

April 8, 2009, 2:36 PM EST

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Canadian Auto Workers union President Ken Lewenza says the Ontario government has a "moral and legal responsibility" to help protect the pensions of all workers in the province, and should be strengthening the provincial pension backstop, not weakening it.

Lewenza was reacting to comments today from Premier Dalton McGuinty indicating the province's Pension Benefits Guarantee Fund (PBGF) will not cover retired autoworkers in the event that their pensions were affected by a potential bankruptcy at General Motors Canada or other major auto companies.

"Retired workers are the innocent victims of this crisis, and the provincial government cannot abandon them if we experience the worst-case scenario of a major bankruptcy," Lewenza said.

"And this is not just an issue for autoworkers.  It's an issue for all workers in Ontario who toil their whole working lives in hopes of enjoying a decent retirement," Lewenza added.  "Government has an absolute responsibility to protect retirees from the worst effects of the financial meltdown, and the irresponsible actions of their employers."

Lewenza pointed out that the provincial government shares responsibility for the pension crisis at General Motors, because of a 1992 loophole (long opposed by the CAW) in the Pension Benefits Act that allows GM to fund its pension to a weaker standard than other employers.  Lewenza also pointed out that even when GM Canada was the most profitable business in Canada (as was the case for many years in the 1990s) it underfunded its pension plan.

"GM's pension fund is in trouble largely because of the failure of provincial pension regulations.  And GM has paid a very substantial proportion of the premiums that have been collected over the years by the Pension Benefit Guarantee Fund.  So for the government to now suggest that retired autoworkers would be denied the protection of this fund in unconscionable."

"Retired autoworkers are being singled out today.  But every person in Ontario with a defined benefit pension is also at risk, if the government abandons its responsibility to backstop the system," Lewenza said.  He pointed out that the provincial government's own Expert Commission on Pensions (headed by Harry Arthurs) recently recommended the expansion of the PBGF, to cover a larger portion of pensions affected by the bankruptcy of plan sponsors.  But now the government seems to be moving in the opposite direction.

Lewenza stressed that the best way to secure pensions for both current and future retirees at GM and the other automakers is to keep the companies operating long into the future.  He recommitted the CAW's willingness to engage in three-way discussions (with the automakers, the provincial and federal governments, and the CAW) on ideas for smoothing and financing pension costs and other so-called "legacy" costs as part of the broader restructuring of the auto industry.

"Our top priority is keeping GM and the other automakers in business," Lewenza said.  "We look forward to working with both levels of government and the companies in a shared effort to develop a more sustainable and secure system for funding pensions and other retiree benefits."


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