6. Social Investment and Public Services

Canadian workers’ pension funds should be used to strengthen public services and to keep infrastructure in public hands.  Instead, our pension funds are increasingly sought after and used as a source of financing for Public Private Partnerships (P3s). 

P3s are any of a variety of arrangements in which private for-profit corporations operate, maintain, lease-back or own public services and infrastructure such as highways, hospitals, arenas, rail lines, schools and electricity generating stations.  P3s are used by governments to privatize services and infrastructure.

Traditionally, governments have raised capital to finance new infrastructure by issuing bonds and direct borrowing.  Participating in direct public financing of public services is how our pension funds should partner with government. 

This type of investment will support keeping public services in public hands, as well as being more likely to ensure that unionized building trades workers will build the project.

Pension administrators have a fiduciary duty to plan members.  This simply means that the pension fund must work in the best interests of its members.  Typically, the ultra conservative professionals who usually get to determine the “interest” of the plans’ owners have simplified it to a very narrow position of maximizing returns, without consideration of the consequences. 

This blind doctrine does not always represent the broadest interest of workers.  Workers’ interests go well beyond profit making to include an interest in our own employment, overall employment levels, healthy communities and the continuing operation of a sustainable and healthy economy to say nothing of international solidarity.

As large and long-term institutional investors, pension funds have been perfectly positioned to invest in securities of governments needing to finance budgetary deficits.  These partnerships have allowed important public projects and programs to proceed on a financed basis, while providing very good returns to the pension funds doing the investing.

P3s on the other hand are highly risky ventures, both financially and politically.  Community opposition, critical reviews by provincial auditors, changes in government, reversal of government policy are only a few of the reasons pension funds should reject P3s proposals.  This to say nothing of the fact that P3s are bad public policy.

Workers deferred wages must not be used to spread and promote P3s.

7. Establishing an Effective Pension Regulator

Workplace pension plans would not exist in Canada (except for senior managers) without unions.  Most pension plans were obtained by unionized workers at the bargaining table.  Unfortunately, this reality has not been reflected in the institutions that regulate pensions.

In Ontario, the Pension Commission (PCO) was dominated by employer representatives, and generally did the bidding of employers, unless directed otherwise by the Courts.  In 1998, the PCO was replaced by the Financial Services Commission of Ontario (FSCO) and the Financial Services Tribunal (FST).  The FSCO and the FST continue to be dominated by employer rep-resentatives and their pension mandate was diluted by adding other regulatory responsibilities for the insurance and mortgage broker industries.

If workplace pensions are to be effectively regulated we need a pension commission that deals exclusively with (and can make policy on) pension matters. 

It must reflect workplace pension reality and have equal numbers of union and management representatives.  It must also be given the resources to effectively regulate workplace pensions, rather than simply responding to complaints.

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