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Pension Leaches Take a Stand for Insolvency

Written by Wanda Pasz Tuesday, 16 May 2006

Laws requiring multi-employer pension plans (known as MEPPs) to stay solvent in case they need to be wound up should be scrapped. So says a lobby group representing some of the cream of the crop of insolvent Canadian union pension plans. Have they no shame? Apparently not.

According to a recent report in the Toronto Star, a spokesman for the Multi-Employer Benefit Plan Council of Canada (MEBCO) says it just isn't fair to require large multi-employer pension plans like the Labourers Pension Plan of Central and Eastern Canada and the UFCW's Canadian Commercial Workers Industry Pension Plan to meet current solvency regulations because the chances that these plans will ever collapse completely are slim. Presumably the employers who contribute to them will never go out of business, the workers one whose behalf contributions are made will never decertify or change unions and the plans themselves are in no danger of ever going bust - no matter how many bizarre investments their trustees make or how much money is lost in harebrained schemes to renovate derelict hotels or boarded up resorts.

Pension industry profiteers are stoking the fire. Some hint darkly that pension plan members may have to take a hit - in the form of reduced benefits - if the laws are not changed.

According the report in The Star, under current regulations, the Labourers' plan would fall 46% short of those obligations. The UFCW's bedraggled CCWIPP would be about $700 million short (according to its actuarial report for 2004.) And then there's this solvency-challenged gem that we discovered a few weeks ago. No wonder the MEBCO guys don't like the rules. They make them look like idiots.

In their zeal for repeal, the experts-for-hire have come up with an explanation for the current sad state of these pension plans that's really novel: The law. It's the law that's causing their problems.

"Legislation is what's causing the crisis in pension plans...not necessarily the pension plan's own circumstances." says Susan Bird of McAteer Group of Companies.

It's sort of like saying the law is what's causing our problems with crime. If there were no criminal law, there would be no criminals and hence no crime problem. See how easy that is? Why didn't anyone think of it sooner? Susan Bird should be addressing the next convention of chiefs of police. Quite possibly she's come up with the solution to an age old problem that neither prisons nor social programs have been able to solve. Maybe we could apply the same logic to other areas of the law. We could eliminate bankruptcy, tax cheating, squatting - you name it. All our social ills could be solved if there were no laws.

Joseph Mancinelli, vice-president of the Labourers' International Union of North America, says: "Our plan took the position that we are not going to follow a solvency formula, and we are not going to look at wind-up." That's called tackling the problem head on. Don't like the law? Don't pay it any mind. Joe's taking a stand for insolvency.

What Bird and the other pension leaches aren't addressing is that some of these pension plans' "circumstances" include some astoundingly awful investment practices. Here's an 80-page report about the UFCW's CCWIPP. They borrowed a page from the Labourer's guide to stupid pension investing and took it to a new level.

Do these adventures in investment lunacy have an affect on the solvency position of these pension plans? Who knows. Nobody seems eager to go there. Certainly not the crew of pension leaches that run MEBCO (which includes the CCWIPP's famous pension expert Joan Tanaka and an assortment of construction industry flies).

Good thing the Ontario government isn't looking too warmly on their proposal. MEPP members should write their MPP's and make sure they know that solvency laws are a good thing.

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