BCPA RESPONSE

The BCPA welcomes the improvements made by the Bank, particularly the elimination of some of the inequity in survivors’ pensions, which will result in a 20% increase in the pensions of those affected.

The pressure for an equitable settlement of the pension surplus issue exerted on the Bank by individual pensioners and by the Bank of Canada Pensioners’ Association was very likely a significant factor in the Bank’s decision to make these improvements. While the Executive Committee was asked to comment on the drafting of the communiqué, it was not consulted on the terms of the improvements.

The Executive Committee believes that the improvement in the life-time pension at age 65 is far more modest than it should have been given the size of the available surplus, if that is all the Bank intends to do. The actuarial review that has just been completed shows a surplus of $188 million, an increase of 86% from the last actuarial review in 1999!

This huge increase is in spite of the tough market conditions last year and the drain of about $30 million during this period by contribution holidays taken by the Bank (about $21 million to date and continuing at $7 million a year) and the current staff ($8 million over two years). The Bank has indicated that the improvements will reduce the surplus by $27 million, $10 million of which is for current staff and $17 million for retirees, surviving spouses, and deferred pensioners. Less than 15% of the surplus is being used to fund these new improvements.

We believe that the Bank missed an opportunity to settle the surplus dispute by providing a more meaningful increase to lifetime pensions of all members. The fact that current staff will (rightfully) benefit from the improvement in lifetime pensions in addition to their recent contribution holiday means that there is still an element of inequitable treatment among members of the pension plan. The recent survey of BCPA members, taken before the Bank’s announcement, overwhelmingly indicated that the resolution of the surplus should be the top priority of our association. (A summary of this survey can be found later in this bulletin.) Feedback from our members since the announcement was made confirms that the surplus issue continues to have priority. The Executive Committee believes, therefore, that the surplus issue should still be on the table and intends to pursue it vigorously with the Bank.

To help you determine what the Bank’s pension improvements mean for you, we have developed a pension improvement calculator to provide you with an estimate of how much your pension will increase starting at age 65.

In addition, those who were entitled to a 50% survivor’s pension will now receive a 20% higher pension.