Crown Railway’s In Contract Talks: ‘No Sign Sky Is Falling’

Dale Smith, www.blacklocks.ca
Cash-strapped VIA Rail is in the “early stages” of contract talks with employees including review of the Crown railway’s pension liabilities. VIA reported a record $317.1 million deficit in 2014.

“We’re still in the early stages, mostly from a high-level perspective,” said Brian Stevens, Unifor national rail director; “We certainly have proposals on a number of the economic issues, and pensions are one of them. We would like to see the same pension plan that’s been in place since the creation of VIA Rail.”

The railway hired pension consultants in 2014 after forecasting a 16 percent increase in contributions to $107 million. “The major risk associated with the pensions plans is the funding risk, which is the risk that the investment asset growth and the contributions to the pension plans will not be sufficient to cover the pension obligations, resulting in unfunded liabilities,” VIA wrote in its last Annual Report to Parliament.

“We opened bargaining on October 30 and have had a couple of sessions so far,” Stevens said; “Presently they have not indicated the sky is falling.”

VIA estimates more than a third of its workforce, 35 percent, is due to retire by 2020. Pension contributions for the existing defined benefit plan began increasing in 2013 towards a 50-50 target mandated by cabinet for all federal employees.

Under terms set by arbitration, staff hired since 2014 qualify for defined benefits guaranteeing fixed payments from the railway, and a defined contribution portion funded by employees with a formula for matching funds. Unifor represents VIA service, sales and maintenance workers.

Marc Laliberté, then-VIA president and CEO, said during 2013 contract talks that pension bills were “putting significant cost pressures on our bottom line”. Management in an earlier 2013-2017 Corporate Plan warned of more service cuts on lesser-used routes, and in an unrelated 2015 tax appeal argued it was obsolete “without subsidies provided by the federal government, the national passenger railway system operates at a loss”.

The railway has not yet completed its 2015 financial accounts. Its most recent report estimated subsidies on the national rail system averaged 39¢ per passenger mile, ranging from a high of $4.77 on the Sudbury-White River, Ont. run to a low of 21¢ per passenger mile on the Montréal-Ottawa-Toronto service. The big cities’ service draws the greatest traffic on the VIA network carrying 2.1 million passengers a year.