Canadian Labour Congress

Canadian Labour Congress

October 02, 2007 10:40 ET

Labour Demands That Government Stand Up for the Pensions of Canadian Workers and Retirees

OTTAWA, ONTARIO--(Marketwire - Oct. 2, 2007) - The President of the Canadian Labour Congress demands that the federal government make sure the pension investments of working Canadians are not put at further risk by the crisis in the asset-backed commercial paper market.

In a letter, dated Friday, September 28, to the federal Minister of Finance (below), Ken Georgetti urges the appointment of an independent monitor to represent the public interest in ongoing efforts to resolve the crisis.

"Dear Minister Flaherty:

I am writing to urge you to appoint an expert independent monitor to represent the public interest in ongoing discussions to resolve the crisis in the Asset Backed Commercial Paper (ABCP) market.

Some 80% of our 3.2 million members belong to defined benefit pension plans, as do many more union retirees. Many pension plans are at risk of taking a significant hit to their assets because of investments in non-bank ABCPs, according to a major report released yesterday by a respected independent analyst of financial markets, Diane Urquhart. These investments were deemed to be virtually risk-free by pension trustees because of a top credit rating from Dominion Bond Rating Service (DBRS), and the perception that the banks would provide liquidity to prevent a freeze-up in the market (as is the case in most other countries).

The Urquhart report draws attention to the fact that many of the same major financial industry players who marketed non-bank ABCP to pension plans and others are now working out how to resolve lack of liquidity in the market, which is likely to be re-established through a downgrading of asset values. While some large government pension funds are involved in the investor committees trying to work through a solution, there is no person representing the public interest per se.

In this context, we urge you to read the Urquhart report and to give very serious consideration to her proposal to appoint an expert independent monitor.

I am sure you will also be reflecting on what regulatory changes are needed moving forward so that investment products with significant underlying risk are not sold to pension plans as virtually risk-free."

The Canadian Labour Congress, the national voice of the labour movement, represents 3.2 million Canadian workers. The CLC brings together Canada's national and international unions along with the provincial and territorial federations of labour and 136 district labour councils. Web site: www.canadianlabour.ca

Contact Information

  • Canadian Labour Congress
    Jean Wolff
    613-526-7431 and 613-878-6040
    or
    Canadian Labour Congress
    Jeff Atkinson
    613-526-7425 and 613-863-1413