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 Pensions vs. RRSPs—Which are better? (July 2007) By Brian Cochrane, Assistant Business Manager In our conversations with workers on the job, the question of retirement planning often arises. All too often we see young workers (especially in construction) use their RRSPs as a savings plan. They then cash it in to take a vacation or get some extra money during their slow periods. Unfortunately, this does little for their retirement plan. Oftentimes, they are paying large fees for mutual fund managers or are invested in short-term “cash accounts” which give little investment return. Most have not thought about what they really want from their retirement nest egg in the future. Upon retirement, most workers want a regular cash flow to replace their employment earnings. The OE Pension Plan is an important part of our members’ benefit package. It is designed to provide our members with the best pension possible. Some organizations say RRSPs are better than a pension plan because they put the individual in control. This is highly misleading. First, most people who buy mutual funds with their RRSP money pay fees of up to 3% annually to have their funds managed. In addition, an individual cannot command the negotiating power of the money managers of a pension plan. It is like the power of a local union in collective bargaining compared to a non–union worker asking for a raise on his or her own. Second, the RRSP route is playing the retirement lottery. Timing can make a big difference. Your rate of return will depend on when you decide to retire and convert your RRSP into some form of regular cash flow like an annuity or RIF. It will depend on the investments that were made, the state of the equity markets and the rates that insurance companies are paying for annuities. Changes happen on a year-to-year basis. OE Pension Plan members receive additional benefits every year with the ultimate goal being the replacement of a good portion of their working income upon retirement. Our plan pays out over $30 million a year to retired members. It is just one more benefit of working union. New safety regulations for young/new workers Regulations come into effect on July 26 for new and young workers because they are at the highest risk of injury and death. The labour movement has been lobbying for years for tougher regulations and enforcement of existing regulations. WorkSafeBC now requires that all workers who are new to the workplace (not just new to the employer), or are under 25 years of age, to receive orientation about the hazards in that workplace prior to starting work. More than half of work-related accidents occur during a young worker’s first six months, with almost 20% occurring within the first month. Regardless of their age, all workers have five to seven times the risk of sustaining a workplace injury during their first month on the job. Talking with the Minister Business Manager Gary Kroeker and I met with Transportation Minister Kevin Falcon because there are a number of issues that we want kept in the forefront with this government. Local 115’s position on issues such as crane safety and heavy equipment training is important in light of all the scheduled infrastructure work. We continually remind government about the important contribution made by our members and the Local Union’s involvement in training to support these projects. A load of CLAC trap Back in May, the merit shop or non-union sector of the construction industry held a conference in Victoria. To no one’s surprise, two of the major sponsors were the Christian Labour Association of Canada (CLAC) and the management legal firm that supports them. We took this opportunity to try to get the B.C. Labour Relations Board to wake up and smell the coffee regarding CLAC. We have reprinted the letter sent to Brent Mullin, who is chair of the LRB. As we head into a busy summer season, our organizers will be active in talking with workers on CLAC jobsites. It is important that our members work with us in gaining greater market share during this construction boom. To close, many of the building trades unions have been working on a strategy to build a stronger unionized industry. I support the efforts of all who are working to find solutions to fit today’s environment rather than supporting strategies of the past. Our members will benefit from the leaders who are trying to make a difference in today’s world. Live Better—Work Union. |
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