Newly hired Canada Post employees who work in rural areas will be put in a new defined contribution plan under terms of a proposal that was accepted by an arbitrator this week.
New employees hired after Dec. 31 represented by the Canadian Postmasters and Assistants' Association, a union representing rural Canada Post workers, will be placed in a new DC plan instead of the existing Ottawa-based Canada Post defined benefit plan, according to a news release on Canada Post's website and a statement on the union's website.
CPAA and Canada Post had reached an impasse in negotiations in March and both sides agreed to arbitration. Arbitrator Michel G. Picher accepted Canada Post's proposal on Monday.
Employees represented by the Canadian Union of Postal Workers, the union for the Canadian postal company's rank-and-file employees, are in the DB plan. Negotiations between CUPW and Canada Post, a government-sponsored corporation that operates the country's postal service, are at a stalemate on a new contract; along with pay issues, Canada Post wants to replace the DB plan with a defined contribution plan for CUPW employees.
“Canada Post is appreciative that the arbitration process efficiently expedited the resolution of difficult bargaining issues between us and the CPAA,” Deepak Chopra, Canada Post president and CEO, said in the company release.
On its website, CUPW said it was disappointed in the arbitrator's decision. “Why does the government promise to improve pensions while allowing crown corporations to do the opposite by degrading the pensions of their employees?” the CUPW statement said. It has rejected calls for arbitration on its contract and has a strike mandate that expires Aug. 25, although union officials have said CUPW does not want to call a strike.
Canada Post had C$21.9 billion ($15.8 billion) in defined benefit assets as of Dec. 31. As of that date, the pension plan had a going-concern funding ratio of 106.4% but a solvency funding ratio of 78.8%, according to a 2015 Canada Post report to participants.
The company has a DC plan for administrative and technical employees hired after May 2014 and for supervisors and employees in supervisory support groups hired after February 2015. That plan had C$18.2 million in assets as of Dec. 31, according to the 2015 participants report.