Good afternoon. I'm Phil Benson, a lobbyist from Teamsters Canada. I want to thank the committee for inviting us back. It just seems a short time ago that we were talking about pensions. As you are aware, we were also in front of the committee on the other side, in other areas.
First, we view this as part of a process. We're looking forward to Minister Flaherty's study—whether with Minister Flaherty, the department, or this committee—later on pension reform. We're looking forward to participating in it, and we welcome the committee taking its time today to once again review pensions.
Though we're looking at a pension crisis, really it is decades in the making. It is decades of inaction. It's decades of letting the entire problem slip. Federal pensions and the pension regime are just one part of the puzzle.
I want to look first at CPP and OAS.
CPP is well funded now. It's in a special purpose account. I hope it will remain there and not end up as the employment insurance account did in a special purpose account and be plundered. The lessons there were that decades of inaction led to the need to increase premiums, in effect, during the last recovery. With the EI account, the plundering of the account—and I do applaud the government for setting up a separate account, but the $2 billion was not enough to cover a recession that we're in now, and that's going to lead to an EI premium increase during a time of recovery. Again, it was decades of decisions not made or incorrectly made.
Old age security, something that we all hope to get one day, really depends upon the economy and the ability to pay. It's quite easy in difficult times for governments to perhaps increase clawbacks or to vary or change it.
In short, our private pensions may in fact be one of the most important and critical means for Canadians to retire. In the past four or five years, there have been two series of changes to the system for dealing with pensions and funding. There's a good thing about that--mostly, importantly, that governments, both this and previous, didn't give the companies everything they wanted. The other good thing is that they also listened to labour. They listened to the Teamsters and they accepted some of our recommendations in that action.
Companies basically want to delay funding. They want to use the dollars to build their businesses. I've seen that in the documents they presented to you. Also, the last time we spoke, one of the company representatives made that statement.
The negative about those changes is that it didn't go far enough to address the problem. Yes, it has made some significant changes. Canadian Pacific Railway, one of the employers that a lot of Teamsters are very proud to work for, did kick in $500 million, but their fund is still in a deficit. It was a start, part of a process, not a complete endgame.
Pensions, as the first point, to reiterate what the CGA said, are forgone wages. They're deferred compensation. They're not a gift. They're not a benefit. Let's not be paternalistic; if you're not paying the pension, you're going to have to pay more wages.
In the multi-employer plan world that a lot of our members live in, it's not much of an issue because the wages go into a separate fund. The employer can't get its hands on it. It's generally jointly managed between a union and an employer. There are no contribution holidays. The moneys are generally invested very conservatively, as is a requirement under union leadership.
That brings us to the second point. Investments should be more insurance-like, more invested in bonds and less in stocks, especially as we see the demographics—and what a surprise, dealing with this for 25 years—the aging baby boomers. We cannot have baby boomers in retirement in 10, 15, or 20 years at the beck and call of the market, of a financial crisis, of a war, or of anything else. If that happens, the mistakes we make today will hamstring future governments, just like the mistake to not properly fund the Canada Pension Plan hamstrung the previous Liberal government, and, as we would say, the misuse of the employment insurance account has hamstrung this government. Most people will not be here, but if we are retired, we will pay the price for those mistakes. I urge you not to repeat them.
The third basic point we have is that because these are deferred contributions, workers, pensioners, and their pension funds must be a priority under the BIA. They must be protected. Simply put, people should know when they retire that they're going to get x amount of dollars and that it is going to be there.
If not, let us go forward 10 to 15 years. Let's hypothesize. Most of the baby boomers are retired and we have an economic crisis. Future members of Parliament around this table--hopefully I'll be retired by then and hopefully we get it right--will be sitting here dealing with a simple problem. How much more can we pay out in GIS in a crisis? Do we have to claw back old age security? Can we meet the Canada Pension Plan?
Changing this isn't for today. It's for 10, 15, or 20 years into the future. For the workers we represent at Flextronics and Nortel, they're paying the price today. You've heard about Nortel being at 70¢ on the dollar. Flextronics is at 25¢ or 30¢ on the dollar. I'm sure other unions can come forward with the same story.
We cannot have that happen in 15 to 20 years. That's why we're looking forward to this process. We're looking forward to the review by Minister Flaherty and the government. We have to get it right, because we can't hamstring future politicians. We can't hamstring their options.
With that burden, there are going to be a lot of options. Hopefully, one of them isn't reducing people's incomes in retirement. We have a crisis that has been 10 or 15 years in the making. Let's take our time. Let's resolve it. Let's get the answer right. If we do not, we will all pay a price in the future.
Thank you.