Court halts plan to take 54% of wages to fund pension
A Saskatchewan employer's plan to hike pension plan contributions to more than half of its workers wages has been halted by the courts.
The employer is the Saskatchewan Government and General Employees Union, which represents thousands of civil service workers in the province.
The SGEU has 35 employees, who each contribute a portion of their wages to a defined pension plan. For years, the contribution rate was nine per cent. However, in the last three years rates were hiked to overcome funding problems in the plan.
The most recent increase, on Nov. 5, had employees contributing 19.6 per cent of their wages to the plan.
The SGEU wanted to increase that on Jan. 14, to 54.25 per cent, but the employees fought the move and won a court injunction preventing the increase.
The workers argued that such a huge pension plan increase, combined with income tax payments and other deductions, would reduce their take-home pay to barely 20 per cent of their salary.
"If that kind of contribution was imposed many of them would lose their homes," Larry Dawson, one of the workers affected, told CBC News Tuesday. "They'd lose their cars. They wouldn't be able to support their families."
"We fully appreciate that this sucks," said Bob Bymoen, president of the SGEU. "Its all done within the laws and we're following the direction of the actuaries and the superintendent of pensions."
However, the workers say the SGEU wants to discontinue the defined benefit pension plan and is using the need for higher contributions as a tactic to get the employees to agree to end the plan.
"It's pretty draconian," Dawson said. "It's right off the charts as far as pressure tactics go."
Dawson added that staff morale is very low because of the dispute.
"How do you motivate the staff … to be zealous in arguing with employers and in bargaining," Dawson asked, "when you're not going to give them the same sorts of things you're ordering them to fight for?"
The court injunction, which was issued Jan. 8, says the current contribution rate of 19.6 per cent of wages is frozen "unless and until the [SGEU] obtains the written waiver and approval of the Minister of National Revenue … allowing increased contributions to be made."