Good afternoon, ladies and gentlemen.
I would like to begin by thanking you for your invitation to participate in this important study. Indeed, as Vice-President of the Communications, Energy and Paperworkers Union of Canada, I am always concerned about issues that relate to retirement plans, and let us just say that I am even more concerned these days. I will have an opportunity to explain why a little later in my presentation.
As the name suggests, our union represents members from three major areas: telecommunications and communications, with companies like Bell and all its affiliates; energy, and here our members work for such petrochemical companies as Petro-Canada, Shell and Ultramar; and paper, forestry and wood product manufacturing, in all its forms. Within the union, my role relates to this last sector for the Quebec region. Altogether, we represent more than 45,000 members in Quebec. As you can see, we are primarily concentrated in the private sector.
Let us take a moment to talk about public plans. First of all, although I do not intend to provide the historical background of public plans at the federal level and in Quebec, as others have done that previously, I do want to lay out a couple of initial premises. For one thing, as far as our union organization is concerned, there is no doubt that the best way of providing a decent income to the population as a whole, on a universal and equitable basis, is through public plans.
As regards supplemental pension plans, our union experience shows that people do not spontaneously or easily contribute to a supplemental pension plan, even when the offer is attractive. The only example I can provide is that of the FTQ Solidarity Fund and the tax benefit it provides in terms of tax credits for share purchases—a benefit of 30%. Another example would be the approximately 40% in tax credits an individual receives through RRSPs, depending on income, but with respect to which we find ourselves having to explain to and convince members and the public in general just how important it is to prepare for retirement.
Whatever the range of products and options we are seeing today, there are seniors living in conditions that are absolutely unacceptable. In my opinion, it is unthinkable that the society in which I live would choose to turn a blind eye to the money problems seniors are facing. Recently, an absolutely astounding story on the program L'épicerie on Radio-Canada talked about the fact that thousands and thousands of seniors currently suffer from inadequate nutrition, and not always because of poor lifestyles, since money is a major factor. No one should end up in a situation like that. That is why more generous public pension plans would be the best way of ensuring that seniors can rely on a decent income.
I would now like to turn my attention to the introduction of private pension plans. Given the current situation, for quite some time now we, in our various union organizations, have focused on the introduction of defined benefit pension plans, which we consider to be the most appropriate in terms of providing a stable and predictable retirement income. It should be said that we have worked so diligently that, in a number of industry sectors where we represent members, we have succeeded in introducing sound pension plans for the benefit of those working in these industries. Unfortunately, the financial and economic problems we have faced in recent years have seriously disrupted the plans in place, in some cases resulting in changes, when some were turned into defined contribution plans or were simply terminated.
I have two comments to make with respect to that new reality. First of all, I want to say, as others have before me, that it simply is not possible to pin all the problems associated with private pension plans on the difficult economic context we have experienced recently. Although the crisis may have precipitated these events, it is important to emphasize the lack of foresight and planning, as well as premium holidays—which certain employers made a habit of—which weakened these same plans. At some point, market returns were meeting plan requirements so well that some employers forgot that, in years when the stock market was not doing so well, they might have to pay out more. When recess was over and the bell rang, the reality of the situation hit hard.
Secondly, as in the past, it was again the unions being innovative by developing a new pension plan known in Quebec as the “member-funded pension plan”, which is, in fact, a type of defined benefit plan. We are already well acquainted with it, but the difference is that there may be multiple employers involved, as workers from different companies are grouped together under one plan and, at the same time, employers are no longer responsible for any deficit that may occur.
In that case, significant reserves need to be constituted in order to respond to stock market fluctuations. In that respect, we would make the same recommendations as the Fédération des travailleurs et travailleuses du Québec with respect to the introduction of such plans in areas under federal jurisdiction. Indeed, the member-funded plan has required regulatory adjustments that have been made in Quebec, but not at the federal level.
I would like to move now to the final part of my presentation, which has to do with the application of Bill C-36, the Companies' Creditors Arrangements Act, or CCAA. As I indicated previously, I have special responsibility for the forestry and wood product manufacturing sector. That basically refers to members working in forestry operations, sawmills, panel plants, paperboard and paper mills. I don't think I need to provide a lengthy explanation regarding the disruption that has been occurring in this economic sector for years now. Whether it is because of the economic context, the higher cost of energy, problems with the softwood lumber agreement or the collapse of the paper market—and I'm sure I have forgotten some others—you are aware that the major forestry companies are now in an extremely precarious situation. In fact, in Quebec we have four of the largest employers and, as if the rest was not enough, they are under the protection of the CCAA. I am referring here to Smurfit-Stone, AbitibiBowater, Fraser Papers Inc. and White Birch Papers. These four companies alone employ 7,000 workers who are members of our union. And that does not include these companies' 10,000 retirees, 3,000 of whom I have met with all across Quebec.
I will spare you the technical details, but suffice it to say that enforcing that legislation is extremely complex and makes our life extraordinarily difficult. To be perfectly frank, I would say that both our members' working conditions and pension plans are in doubt. I am sure you have heard about this: people at Fraser Papers Inc.—both current and retired workers—have lost almost 40% of the value of their current and future retirement benefits; there have been wage cuts of more than 3%; the defined benefit pension plan was scrapped, even though the owner, Brookfield Asset Management, made profits of more than $680 million in 2009. At White Birch Papers, which has three major plants in Quebec, as well as 1,000 active workers and 1,600 retirees, the plans are only 67% solvent. I will stop my description of the disaster there, because I think you have understood my point: it is absolutely critical that pension plans be better protected and be deemed to constitute privileged claims when problems arise.
Is it normal for a worker who is on the verge of retiring, and who has contributed to a pension plan for 30 years, to now be told that the value of his pension benefits has dropped by 5%, 10% or even 40%? Is it normal for retirees who invested throughout their active life in their pension plan to suddenly find themselves without income? At a time when people were being affected by cutbacks, Smurfit-Stone was paying $47 million in bonuses to retain its managers and simply stopped making special contributions.
I'm sure you can understand that, to my own way of thinking, that is still completely unacceptable. And it is no more acceptable for workers who are owed money in the form of termination bonuses to find themselves out of luck because the company is subject to the CCAA. That is currently the case for the AbitibiBowater plants in Beaupré and Dolbeau, in Lac-Saint-Jean. Vigils are being held to prevent the company from transferring or liquidating equipment for its own benefit.
I realize I have deviated somewhat from the pension plan issue, but this bolsters the recommendation we have made many times to the federal government, namely that quick action is needed to amend the CCAA and the regulations. It is important that debts to workers not be taken hostage, like any other debt, and that they be settled retroactively.
I wanted to make you aware of the reality we are currently facing. This is something that must be corrected, so that the CCAA can never again be used as a loophole to escape obligations under a pension plan. Even more recently, Kruger split the company in order to group its least productive paper divisions. Our fear is that the company will apply for CCAA protection in order to circumvent solvency requirements. In the hope that you will act on our recommendations, I thank you for this opportunity to appear.