OPSEU News banner

Fighting Back Liberal Attack on Retiree Benefits

Responding to the Liberal attack on retiree benefits in the Ontario Public Service

On February 18, 2014, the Liberal government led by Premier Kathleen Wynne announced changes that will increase the cost of extended health benefits for retired public service employees, LCBO employees, and others in the OPSEU Pension Trust or the Public Service Pension Plan if they retire on or after January 1, 2017. Benefit premiums from that day forward will be funded on a 50-50 basis, with the government paying half the premium and the retiree paying the other half.

The changes will cost those who retire on or after January 1, 2017 approximately $1,500 per year for family benefits and $800 per year for individuals (at today’s rates). Also effective January 1, 2017, employees will require 20 years of service, up from the current 10, in order to be part of the retiree benefit plan at all. And those who can afford to pay their share of the premium will only be eligible to receive benefits if they retire directly from their job to an unreduced pension. They cannot quit their job and defer their pension to a later date and still receive benefits.

Here’s what your union says about these changes:

Your union was not involved in this decision.

These changes were announced in a news release. The government did not consult with OPSEU, and no negotiations of any kind took place. If the union had been involved, it might have been possible to negotiate a fairer solution.

These changes are politically motivated.

The government says it aims to use savings from employee benefits to pay down the current provincial deficit, but the changes do not take effect until about the time when deficit is currently scheduled to be fully paid off. A better explanation is politics. With a provincial election likely just a few months away, the Liberals are caving in to pressure from the Ontario PC party, which has been calling for deep cuts to wages and benefits for public employees for some time. Apparently the Liberals want to distance themselves from the very people who make government and its agencies work.

This is a regressive, unfair attack that hurts OPSEU members more than it hurts higher-paid employees and managers.

The average OPT pension was $20,005 at the end of 2012. Combined with a typical Canada Pension Plan payout of $6,000 – $7,000 per year, the average OPT retiree earns about $27,000 a year before deductions. An extra health premium of $1,500 per year is equal to a 5.5 per cent pay cut for a family. (Those who can’t afford to pay the $1,500 and drop out of the benefit plan altogether end up taking a loss in benefits worth $3,000, or 11 per cent of annual pension income.)

In contrast, for an OPS manager with a pension of (say) $75,000 a year including CPP, $1,500 is equal to just 2 per cent of annual pension income. The greater your retirement income, the less these changes hurt.

These changes unfairly discriminate against younger workers.

Lately there has been much talk in the news media about how the next generation of workers can expect less from the job market, but only a few commentators have proposed taking steps to protect job quality for future workers. One simple step to do so would be to stop forcing the future workforce to pay more.

The government is exaggerating how much money will be saved by forcing retirees to pay more.

The government has told reporters that forcing retirees to pay half the cost of benefit premiums will save $1.2 billion over 5 years. Yet even if every retiree affected paid the highest rate of roughly $1,500 per year, it would take 800,000 person-years to save $1.2 billion. With somewhere between 3,000 and 4,000 employees retiring from the affected workforces each year, according to government figures, a much more realistic figure for five year savings would be in the ballpark of $90 million – small change for a government with $116 billion in revenues, but a very big number for those paying for it.

Your union is reviewing all legal avenues for opposing these changes.

To date, benefits for all OPS retirees have been based on benefits for active employees negotiated between OPSEU and the government, but the benefits themselves have been set and funded directly by government. Counsel for the union is reviewing the legal avenues that might be available to oppose these changes.

OPSEU members can fight back against this takeaway.

If you are unhappy with this attack on your future health and standard of living, make your voice heard. Contact Premier Kathleen Wynne directly by phone at (416) 325-1941 or by e-mail at premier@ontario.ca. Reach her on Twitter via @Kathleen_Wynne or on Facebook via https://www.facebook.com/WynneFans. Let Wynne know that you won’t stand for this attack. Let her know that you plan to vote in the upcoming election and that you won’t be voting Liberal unless this decision is rescinded immediately.

Contact your own MPP as well. Contact information can be found by clicking on the Members (MPPs) link at www.ontla.on.ca.

Link up with your fellow workers through social media via the OPSEU Facebook page (www.facebook.com/opseu) or on Twitter via @OPSEU.

Lastly, get plugged in to the next round of bargaining between the government and your union. At the bargaining table, as at the ballot box, what can be lost can also be won.