UFCW Canada

UFCW Canada

November 10, 2008 16:48 ET

Leader of UFCW Canada points to "EI Solution" for pension crisis

National President of UFCW Canada says EI surplus and contributions should be used to stabilize pension funds

Attention: Assignment Editor, Business/Financial Editor, City Editor, News Editor, Government/Political Affairs Editor TORONTO--(Marketwire - Nov. 10, 2008) -

Wayne Hanley, the leader of Canada's largest private sector union says some of the EI surplus of $52 billion should be used immediately to safeguard workers' pension plans battered by the meltdown of the credit crisis.

"The Employment Insurance contributions paid by workers built up that surplus and continue to," says Hanley, the National President of UFCW Canada. "Now use that surplus, as well as a portion of future EI premiums to help workers' pension plans weather the financial crisis and to improve the funding of those plans."

Even before the onset of the current dive in the stock market, in the first quarter of 2008 alone the asset base of workers' pension plans eroded by more than $100 billion. As a result, many plans have been put in jeopardy, or have fallen below the level of assets required under statutory requirements. The result could mean a cutback in what pensioners were expected to receive, or a massive hit to employers to infuse more cash to bring pension fund assets back up to required levels, or both.

"Without some relief, the impact on employers and on workers could be catastrophic," says Hanley. "EI premiums were paid to provide income security, and pensions are income. The billions Canadian workers overpaid in EI premiums should be part of a plan to make sure these pension funds survive until the stock markets recover, and to help fund shortfalls in the future."

The "EI Solution" to the pension crisis would be twofold- some of the EI surplus would be used immediately to strengthen the asset base of underfunded plans, while on a moving forward basis a portion of the EI premiums now paid by workers and employers to the government would be reallocated to workers' pension plans.

"This is not a tax cut, or a handout," said Hanley, "and it would not reduce the employer's or employees' responsibilities to continue their regular pension contributions. By allocating a portion of EI premiums to underfunded pension plans, it would go far to rebalance these plans, as well as provide ongoing funding to stabilize and secure single employer and multiple employer pension plans in the future."

"The stock market may eventually recover, but the retirement security of millions of Canadian workers needs attention now," says Hanley. "The wealth of this country was built by workers. Their pensions must be protected and the EI surplus and premiums can play a vital role in that."

"The EI Solution would not only protect pensioners, it would also protect current workers by letting companies use their cash flow to pay wages, which might not be possible if employers were forced to allocate money to shore up their pensions plans."

"The EI solution would also provide economic stimulus as pension funds would reinvest the additional liquidity back into the equity markets, infrastructure projects, and directly into a number of Canadian enterprises," says Hanley.

"EI must also continue to provide training and income support for unemployed workers. By providing protection to the unemployed, as well as to those currently working and paying premiums, the EI Solution can be critical to helping Canada get through this crisis."


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Contact Information

  • Michael Forman, Coordinator, Media Relations, UFCW CANADA
    Primary Phone: 416-675-1104 ext. 249
    Secondary Phone: 416-579-8330
    E-mail: mforman@ufcw.ca