Why defined-benefit pension plans may be poised for a comeback
A wage increase of 15 per cent over five years was the first thing to catch most observers’ eyes last month when Unifor, the union representing 5,600 workers at Ford Motor Co. of Canada, ratified a new three-year contract with the automaker.
The historic raise was certainly worthy of making headlines. But it was another, less heralded, aspect of the deal involving employee pension plans that has some economists and experts predicting the agreement could signal a new trend in labour negotiations.
Ford agreed to transfer some union members currently enrolled in the company’s defined-contribution pension plan to the College of Applied Arts and Technology (CAAT) DBPlus Pension Plan — a defined-benefit style plan that shifts more of the burden for funding employee retirements to the employer.
Labour economist Jim Stanford called it a notable win for workers that could set the stage for a broader move toward defined-benefit pension plans as other unions and bargaining units — including those representing employees of fellow automakers General Motors Co. and Stellantis NV — look to negotiate their own deals.
“For at least a quarter century, private-sector employers have been doing anything they could do to get rid of defined-benefit pension plans,” Stanford, director of the Vancouver-based Centre for Future Work, said. “I think it’s interesting that this agreement was able to get one big global private company to say, ‘No, we’re going to shift back and look at a DB-style arrangement.’ I think that could be a sign of more to come in other private-sector operations.”
Pension experts say the appeal of DB plans is clear. As opposed to defined-contribution plans, which function more like group registered retirement savings plans
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