What to do with Canada Post?

[TimG]

People like to blame their personal ideological bad guys but the truth is, mistakes were made by a lot of different parties. Remember, these plans are designed and administered by pension professionals using the economic projections of the day and existing pension law, not the unions and the companies.

Which is basically means that the cost of fixing the plans should fall on the employees as well as the companies.

My only objection is the narrative that employees are blameless and therefore should not be expected to help fix the problem.

Edited December 11, 2013 by TimG

[Wilber]

But legally all of the shortfalls were 100% the responsibility of the company. This means no matter how much spin you want to put on it these were company funded pension plans.

Only if they go into deficit. They were designed not to do that. Read my previous post.

What is it about companies keeping the surplus because they were on the hook for deficits that you don't understand? If it was an employee funded plan then the employees would got to keep the surplus.

Pension plans are administered at arms length from the unions and the companies. Once the money goes in, it belongs to the retirees,( unless an employee leaves before they have enough time in to be vested, in which case they will get their contributions plus interest refunded) neither the union or the company can touch the fund or its earnings. Why on earth do you think that a company should be able to take surpluses that employees have contributed? There is a recipe for disaster if I ever heard one.

Sure - it always takes two to tango but unions are just as culpable for agreeing to a plan that would leave their members high and dry if a company failed. Unions had a choice - they could have insisted on a completely employee backed pension plan but that would have required more concessions on the wage front. They were greedy and are now getting burned. They certainly don't deserve any sympathy,

Again, what its it about it being illegal to over fund a plan more than 10% that you don't understand?

I'm not saying anyone deserves sympathy. Just do a little research. Simply blaming unions is stupid and unproductive. The causes of this problem go far beyond unionism.

[Wilber]

Which is basically means that the cost of fixing the plans should fall on the employees as well as the companies.

My only objection is the narrative that employees are blameless and therefore should not be expected to help fix the problem.

I'm not blaming anyone. I'm trying to explain how this happened. If you just want to blame unions, go right ahead and persist with your illusions.

[TimG]

I'm not blaming anyone. I'm trying to explain how this happened. If you just want to blame unions, go right ahead and persist with your illusions.

Actually I don't want to blame unions - I just want to repudiate the notion that employees are innocent victims. If a company is in trouble then cuts to the pension should be on the table.

[cybercoma]

Actually I don't want to blame unions - I just want to repudiate the notion that employees are innocent victims. If a company is in trouble then cuts to the pension should be on the table.

Employees are innocent victims. They're not sitting in that board room making the decisions that are putting the company under.

[TimG]

Employees are innocent victims.

The voted for the union that forced them into a pension plan that was dependent on the company. The union did this because it allowed them to claim success today for more risk later. They are just as culpable as management and any renegotiation needs to acknowledge this culpability. Edited December 11, 2013 by TimG

[cybercoma]

The voted for the union that forced them into a pension plan that was dependent on the company. The union did this because it allowed them to claim success today for more risk later. They are just as culpable as management and any renegotiation needs to acknowledge this culpability.

They're just as culpable as management, eh? The union forced them into the agreements? It's called an agreement because the company agreed to it. They haven't held up their end of the bargaining, nor managed the business appropriately so that their part of the agreement was honoured.

That's the employees fault?

Oh, I'm sorry. You said it's both parties' faults, but you certainly seem to be a lot more critical of the unions and employees than the management here.

[Wilber]

Actually I don't want to blame unions - I just want to repudiate the notion that employees are innocent victims. If a company is in trouble then cuts to the pension should be on the table.

If push comes to shove, it will because if the money isn't there, it just isn't there. Pension plans are part of a bargaining agreement. They are established in return for something else during the bargaining process and are considered deferred wages. The difference is, the employees made their contributions up front and the company differed its until sometime in the future and hopefully never if things go right. We are here, only because things didn't go right. It would be better for everyone if they had.

If the economic projections of the times when these plans were originated had come to pass, we wouldn't be having this discussion.

[TimG]

If the economic projections of the times when these plans were originated had come to pass, we wouldn't be having this discussion.

Of course not. But I argue that the systems set up were designed to fail because the incentives were all wrong. The companies should have contributed 100% of their share at the time AND that should have ended their liability. The only reason they were allowed to defer payments is because of the screwy idea that companies should be liable for pension deficits. The only one that should be liable for pension deficits should be the beneficiaries because they have a vested interest in making sure that the pension does not collapse. Edited December 11, 2013 by TimG

[Wilber]

Of course not. But I argue that the systems set up were designed to fail because the incentives were all wrong. The companies should have contributed 100% of their share at the time AND that should have ended their liability. The only reason they were allowed to defer payments is because of the screwy idea that companies should be liable for pension deficits. The only one that should be liable for pension deficits should be the beneficiaries because they have a vested interest in making sure that the pension does not collapse.

Well, that is an option the company chose as well as the employees. Gee, we don't have to put a nickel into these things and if all goes well, we may never have to. They weren't designed to fail, although they did leave that possibility open.. Most of these plans were fully funded by the employees alone less than ten years ago and it would only take a 2 or 3% rise in interest rates before many would be headed in that direction again.

That said, defined contribution pensions are more likely in the future but companies will have to budget for that on an ongoing basis and it will be part of doing business. They won't be able to put it off and hope it won't ever catch up with them.

[DFCaper]

Employees are innocent victims. They're not sitting in that board room making the decisions that are putting the company under.

The problem is that the company is not a person. The people negotiating are not personally liable. It allows the company to move forward with the expenses pushed out and only an issue if they stay profitable, if not they can just screw the workers.

The union, another company, is in the same boat. The executive is not personally responsible, and and use the ideal state of the DB pension to try to sell it's merit to new work places. If the ponsi scheme fails... Well it is the companies fault, not there's.

And your right, the employees get screwed by both parties.

I don't know many people who have DB pensions in the private sector that haven't gotten screwed.

[DFCaper]

On the original topic, I heard that only 30% of households are going to lose door to door service. From all of the critics, I keep hearing that this is unfair to the elderly and to the disabled.

They make it sound like all of the elderly and disabled are being affected. Smells like BS to me. Now they care.

I bet we will be down to only 3 day service by the end the decade. I still believe that we need Canada Post, so I see these moves as necessary for it long term.

[Wilber]

Also, quite a few smaller unions do not have a professional executives. They are volunteer employees who are depending on the same pension plan for their retirement.

[Shady]

Ah the Ponzi scheme of defined benefit pension plans strike again. At least Canada Post is adjusting a bit to reality and making some necessary delivery changes.

[DFCaper]

Unfortunately these smaller unions are following the lead of the larger unions. I just personally feel that DB pensions in the private sector are not safe if they are guaranteed by a single company.

With the Detroit bankruptcy, maybe public sector pensions may not be as safe as they seem.

[Wilber]

Unfortunately these smaller unions are following the lead of the larger unions. I just personally feel that DB pensions in the private sector are not safe if they are guaranteed by a single company.

With the Detroit bankruptcy, maybe public sector pensions may not be as safe as they seem.

I agree, we have had plenty of evidence that they are not safe. I think DB pensions could be made much safer though but it would mean larger up front investment and building bigger cushions for economic down turns.

[PIK]

Actually I don't want to blame unions - I just want to repudiate the notion that employees are innocent victims. If a company is in trouble then cuts to the pension should be on the table.

I will. What goes around comes around and it just did for CP. Years of whinning and christmas strikes have caught up with them. Waaaay to much pay and bennifits for what they do,and I mean the inside workers. I would like to know how much they spend on taxis in 1 yr for the outside workers..

Edited December 13, 2013 by PIK

[hitops]

That situation was a very small part of the overall mess.

Those who still use this argument (and their numbers have, tellingly, shrunk considerably over the past year or two) are unaware that their pet theory has been soundly discredited, over and over.

What you mean to say is that you believe it's been discredited, but don't actually understand it nor understand any supposedly arguments against it. You likewise, have not offered a counter-argument.

These are the facts of the collapse. The government removed the risk from risky behavior, and risky behavior flourished. We have a very similar phenomenon happening in Canada, with the exact same strategy of allowing bank risk to be bourne on the taxpayer.

Edited December 13, 2013 by hitops

[Human_Observer]

But almost everyone has a smartphone. I hear you can get the Internets and email on it.

No mostly the young have smartphones.

The same generation that will not have pensions.

[Argus]

But one could argue much of Canada Post's trouble is their pension, and its workforce is largely low skill.

There are three issues here. One is that a long time ago the federal government decided it wanted to the 'employer of choice' to attact the best and brightest candidates. The other is that it also decided to set an example by paying a decent living wage, with decent benefits.

I would argue that in both cases, these are worthy goals, however, time has worked against them in both cases.

First, the best and brightest have no interest working for the federal government because the pay sucks. Yes, that's right. Never mind what all the whiners tell you. For upper level jobs in technology, law, science, management, accounting, or any other profession, you can make WAY more money in the private sector.

As for setting an example, the private sector has, instead, been moving as rapidly as possible in the other direction, and pressuring the government to follow suit. Corporate Canada and Corporate America don't want to pay benefits, and don't want to pay more than rock bottom salaries. And the more they've moved in that direction, the more resentment this has produced among their employees -- but not towards them, towards those unionized workers who haven't yet been dragged down along with them.

Instead of saying "Hey, those guys get a decent wage, why don't I?" they say "Hey, those guys get paid too much! You need to cut their salaries and benefits!"

The third issue is, of course, the statement about pensions, which is so much bullshit. Pensions are a very predictable accounting issue. Management knew from the moment they agreed to sign the contract how much would be required by year decades into the future. If they made no allowance for it by paying, as you go, into a proper pension fund, then they and the organization are entirely at fault. Yet is anyone talking about firing them? Nope. Is anyone talking about taking away the uber generous, golden pensions their predecessors got when they left? Nope.

Blame it all on greedy workers instead.

[Shady]

First, the best and brightest have no interest working for the federal government because the pay sucks.

That's simply not true at all.

[Argus]

Unions are not innocent victims in the pension mess. They are co-conspirators.

And what do you feel would be the proper punishment for the other side? The corporations?

Oh wait, I know! Reduce their taxes! Am I right?

Take away the workers pension. Serves em right!

AS for the corporations, let's bow down and give them anything they want. The great god FOX has told us this will make us much happier!

[Shady]

Instead of saying "Hey, those guys get a decent wage, why don't I?" they say "Hey, those guys get paid too much! You need to cut their salaries and benefits!"

So-called decent benefits shouldn't be provided by ponzi scheme defined benefit pension plans, that require the tax payer to kick in the overwhelming amount. That would be like a private company have a definted benefit pension plan with massive shortfalls, and asking the government to fill in the necessary amount. Not all jobs can have so-called decent benfits and pay, because those benefits and pay needs to be based on economic reality, and the necessary renenue to suppor them. they can't go raid somebody elses pocket the way government pensions can raid taxpayers. Stop asking other people to pay for your retirements.

[Argus]

Actually I don't want to blame unions - I just want to repudiate the notion that employees are innocent victims. If a company is in trouble then cuts to the pension should be on the table.

But what will never be on the table is the fat salaries, stock options, and golden parachutes of the CEOs, right?

[Argus]

The voted for the union that forced them into a pension plan that was dependent on the company. The union did this because it allowed them to claim success today for more risk later. They are just as culpable as management and any renegotiation needs to acknowledge this culpability.

Drivel. There were no other options that made any sense over the years. Nor were we in a culture or climate in which companies would routinely repudiate their pension obligations, declare bankruptcy, and then start up again afresh while their employees lost their homes.