Canada Post, Ottawa, should outsource some postal services to reduce its pension obligations and stem its overall losses, according to a study of potential reforms at the Canadian postal service.
“Offering contracts to provide some services, but retaining a core Canada Post, would … allow Canada Post to gradually shrink the size of its pension liabilities for current and recently retired employees,” according to a report, “How Ottawa Can Deliver a Reformed Canada Post,” by the C.D. Howe Institute, a non-profit policy research organization.
According to the report, Canada Post had a pension deficit of C$5.9 billion (US$5.7 billion) in 2012, up 26% from a year earlier. “Under pension solvency rules, Canada Post would have been required to pay an aggregate C$2.4 billion in special payments by 2013 to cover the solvency deficit, but received special federal permission to pay only pay $63 million and $219 million in 2011 and 2012,” the report said.
Canada Post had C$16.8 billion in pension plan assets as of Dec. 31, according to its 2012 annual report.
The Canadian Union of Postal Workers in a news release said it was “dismayed” by the institute's report.
“The C.D. Howe institute was making the same case for deregulation and privatization in 2007, while Canada Post was making profits,” said Gayle Bossenberry, the union's first national vice president, in the release. “These are tired old ideas, not viable solutions for a valuable public service.”
The report is on the institute's website.
