Ontario offers no Guarantees on Pension
Union, Province Struggle Over Money For Retirees
Apr 13, 2009
Ontario Premier Dalton McGuinty’s announcement follows a series of moves designed to save the province’s ailing auto industry.
Loophole allows GM to Under Fund Pension
When the last recession hit Ontario,Premier Bob Rae's government passed legislation allowing some big businesses to opt out of contributing to the provincial pension fund. The result was the creation of the Ontario Pension Benefit Guarantee Fund (OPBGF), and those affected businesses only had to contribute $5 million. General Motors was among those companies who benefited by under funding its pension by an estimated $6 billion.
Any possible bankruptcy could leave Ontarians paying the bill of an estimated: $461/person for the entire population.
Ontario has a contingency fund of $100 million or enough to provide workers $1000 each. In remarks published by the Toronto Star, McGuinty admitted it wasn’t nearly enough: “This comes nowhere near meeting any liabilities- for example, for the auto sector alone, to say nothing of all the other sectors.” There is precedent for using the fund; when federal finance minister Jim Flaherty was provincial finance minister he used it for Algoma Steel.
Auto industry experts say even if GM goes bankrupt and has its assets sold off, the province would still be on the hook for $2 billion.
Canadian Autoworkers Union Furious, Province Will Negotiate
The Canadian Autoworkers Union (CAW) is furious at the provincial government. Union Leader Ken Lewenza described the union’s fury at the situation in comments published on ctv.ca: “I can’t suggest to you how furious we are as an organization. Our retirees won’t be treated with decency and respect during this particular crisis.”
Ontario’s Finance Minister Dwight Duncan stated his government’s willingness to continue working with the union in comments published by the Durham Region News: “The government of Ontario will continue to be there working with the government of Canada, General Motors and or its successor in the United States.” He also admitted the government’s pension fund was inadequate. Duncan is expected to begin talks GM over the pension shorfall.
General Motors and Chrysler’s latest attempts at restructuring have been denied. The federal government recently gave Chrysler another month to come to a technology-sharing agreement with Italian car maker Fiat, and GM 30-days to find a new restructuring plan. The CAW have come to a pattern agreement with GM, and hoped to use it as a basis for negotiations with Ford and Chrysler. Speculation is building that GM is going to file for bankruptcy.
