For business, quick action on snail mail might be the order of the day. But for governments, long-term action on public-sector pension plans should be atop agendas. The resolution of the 2016 Canada Post labour dispute won’t forestall the seismic changes reshaping the landscape of mail, parcel and communication delivery in this country and elsewhere. Nor will it alter the financial realities of public-sector pension plans.
As Canada Post points out in its most recent financial report, its letter delivery payload continues to fall. For example, Canadians mailed 1.6 billion fewer letters in 2015 than they did in 2006, a 32% drop. They will likely mail fewer letters again this year.
That’s going to constrict the corporation’s bottom-line growth and its ability to maintain its rich employee pension benefits, because even with the 9.7% increase in parcels delivered in 2015 compared with 2014, Canada Post’s employee benefits costs were $189 million higher and its transaction mail revenue $207 million lower during the same period.
The Canada Post labour dispute has resurrected debate over the economic viability of public-sector pension plans that traditionally provide defined benefits for recipients, regardless of investment returns and the global economy.
Since 2014, Canada Post has been excluded from making special payments to the Canada Post Corporation Registered Pension Plan (RPP) to provide it with breathing room to make the RPP financially viable. One of the options to achieve that viability is to provide new employees with defined-contribution rather than defined-benefit pensions. That makes abundant sense in the current global economy. As the Conference Board of Canada points out, the $6.2 billion solvency deficit in Canada Post’s current pension commitment is “not a trivial issue.” That’s especially true for Canadian taxpayers, whose bill for public-sector pension plans ballooned to $30 billion in 2013 from $7 billion in 2001.
Nor is reliability of mail delivery in Canada a trivial issue. Both need long-term fixes now.
