Union Says University Pension Cut Violates Pension Benefits Act

Striking workers at a Canadian university have complained to a government agency that a 15-year-old provision in their pension plan, allowing their employer to reduce their pension benefits, is invalid.

Lawyers for the Canadian Union of Public Employees (CUPE) Local 2424, which represents striking workers at Carleton University, filed a complaint with the Financial Services Commission of Ontario (FSCO), saying that a 2003 pension plan amendment violated Ontario’s Pension Benefits Act.

The current strike stems from the union’s complaint that Carleton wants to remove language protecting bargaining and pensions from its collective agreement. The workers went on strike on March 5, after representatives from the union and university could not reach an agreement in negotiations that have been going on for eight months.

“These new revelations are deeply troubling,” said Kevin Skerrett, senior research officer and pension specialist with CUPE, in a release. “Our legal counsel has confirmed that Carleton’s board of governors implemented an amendment to the plan that not only reduced members’ future pension benefits, but did so in a way that contravened provincial pension law.”

The union said that in 2003, the plan enacted an amendment that removed a key protection known as a “non-reduction guarantee,” which states that pensions being paid to retirees can be increased according to an indexation formula, but can never be lowered below the amount promised and paid at retirement. It said the guarantee is considered a fundamental element of all defined benefit pension plans.  

“According to the legal advice we have just received, this amendment was not legal, and this unfortunately confirms our worst fears about the history of the plan’s governance,” said Skerrett. “Our understanding is that no other defined benefit university pension plan in Ontario permits the reduction of pensions being paid to retirees.”

The union said that before it filed its complaint with the FSCO, it brought the matter up with the university, but “received no satisfactory response.”

CUPE 2424 said it is urging Carleton to return to the bargaining table to address workers’ concerns and resolve the dispute. On Monday, Carleton said it proposed to meet with the union and an external expert mediator on March 28 and is awaiting a response.

“This has grave implications not just for this group of workers on strike, but for everyone who belongs to Carleton’s pension plan,” said Skerrett. “It also highlights the crucial importance of protecting these workers’ retirement futures by keeping their pension rights in their collective agreement.”

For its part, Carleton denies the union’s claims that it is looking to reduce pension benefits, saying it “has not proposed the elimination or reduction of CUPE Local 2424 members’ pension benefits,” adding that “this is not something the university is even considering.”