Communication from th FADOQ

 December 2009

FOR IMMEDIATE PUBLICATION

RETIREES AT THE END OF THEIR TETHER

An improvement of the SRG and the protection of retirement funds are essential!

Whereas the recent survey Repenser la retraite 2009 (Rethinking retirement 2009) made by SOM pour Desjardins Financial Security shows clearly the financial difficulties met by our seniors, the FADOQ network deplores the important gaps in the Supplementary Revenue Guarantee (SRG) and asks for its improvement. The network also asks the government of Quebec to adopt concrete measures to protect private pension funds in the case of bankruptcy of the employer. In the survey Repenser la retraite 2009, 35 % of the 1 524 replies stated that they saw their personnel income reduce over the last year.

This is explained, among others, by the weaknesses of programs such as the SRG which haven’t been indexed since October 2008. If the Consumer Price Index (CPI) hasn’t increased in over a year, this is because of the lower cost of gasoline (28 % less in 2009 than in 2008). But in fact, the cost of daily expenditures has increased for the old aged. For low income seniors, food and lodging represent 60 % of their expenses. And the price of food has increased by 2.8 % since a year. Thus, their purchasing power has continually diminished and their economic situation becomes more and more unbearable.

As well, the FADOQ network asks the government of Quebec to adopt constraining laws to protect contributors and supplementary retirement fund (SRF) beneficiaries in case of bankruptcy by their employer. This pension is considered to be a salary deferred in time. It is thus simply inadmissible that it be retroactively suspended. The FADOQ network asks that beneficiaries of a SRF be considered as privileged and priority creditors, in case of bankruptcy of the pension fund or of the employer, before any other creditor, even the financial institutions.

As well, we hope that the SRF be managed in trust in a manner of a heritage distinct from that of the enterprise. Thus, the money administered will be totally independent and recognized as such. The employer will not thus be able to get away from its responsibilities and use the fund for management purposes.

We ask the federal government to listen to the claims and to increase the SRG so as to ensure the well being of those citizens who live with difficulty the somersaults of the economy such as the economic crisis that we’ve been going through for the last year. We equally ask the Quebec government to see that the rights of the contributors and of the retirees of the SRG are respected by limiting measures. Seniors constitute an important part of the population, and their numbers are foreseen to increase in the upcoming years. According to the FADOQ network, the programs and administrative measures should be reviewed and improved today to ensure a healthy future for retirees.

The FADOQ network is composed of affiliated organisations. It has as mission the grouping of persons 50 years and older, and to represent them in those circumstances requiring the recognition of their rights and needs. It has also as mission the organisation of activities and to offer programs as well as services meeting the needs of people 50 years and older. The FADOQ network has presently 250 000 members.


DISCLAIMER

This unauthorized translation is provided as background information for members of the RCRA. For all other uses and users, refer to the original French document to ensure accuracy.
 

Mr. Francois Currie

President of the Retirement Committee

1188, Sherbrook Street West

Montreal, Quebec. H3A 3G2

Dear Mr. President:

I was pleasantly surprised to see the increase in the number of retirees present at the general annual meeting of our APP pension fund held in Montreal last June 18^th. We have to remember that in the early 2000s, the attendance barely passed 15 to 20 people. This suggests more interest and possibly more worry due to the present economic situation.

Speaking of the economic situation, we were surprised, both myself and my team, to note the total absence in the content as regards the effects of Law 1 on the fund. We thought that the decision of Rio Tinto Alcan had not yet been taken to this effect. Should it be that Law 1 is applied, the retirees expect to be well informed of the consequences of a solvability deficit uncovered for a long period and that transparently. (We are not speaking here of the capitalisation deficit nor of the balancing contributions untouched by this law).

Let’s not forget that one of the obligations of Rio Tinto Alcan reads as follows "If there were to be a deficit, Rio Tinto Alcan would be responsible to cover it by supplying all necessary additional contributions"

Another element that greatly surprised us is in regard to the revision of the policy of the surplus which should be done in 2009. Since 3-4 years now we’ve been promised every time that we had the opportunity: "that one will profit by the update of the policy in 2009 to examine the possibility to include therein a catch-up formula".

Now that the opportunity is here, we note a very great prudence, one appears to be less assured, stating that the update isn’t just to reply to the demands of Law 30 which will be applied on the 1^st of January 2010.

The retirees cannot let this opportunity go by, the retirees have great expectations of this. With the present deficits and the loss of purchasing power, additional uncertainty is not an option. The policy must show that. under certain conditions, that there is a hope of catching up the purchasing power previously lost, and that without risking the fund.

Yours sincerely

Reginald Cantin

President RCRA

Copies to: Mrs Jacynthe Côté

Mr. Michel fortin

Mr. Richard Yank