Day hints at two-tiered federal pensions

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Stockwell Day has opened the door to a two-tier pension system for civil servants, saying he won't go after the benefits of "existing" federal employees. The Treasury Board President is the man holding the knife in Ottawa as the federal cabinet looks for ways to save money. So far reluctant to offer specifics, Mr. Day's words are closely parsed for signs of where the Conservative government will cut.

He is facing a campaign of rallies and workplace stickers by unionized federal employees vowing to protect their pensions in the face of the government's five year plan to erase the $53-billion deficit.

Mr. Day attempted to ease those concerns yesterday, telling a House of Commons committee that he will find savings in the staffing budget through attrition rather than cutting pensions and benefits.

"It's not our plan at all to reduce benefits because the employees have paid in to those benefits and we will maintain them," he said in response to a question from a Conservative MP that referred to the concerns of federal unions.

It appeared to be a blanket assurance to worried workers. Yet in a brief answer to reporters following the appearance, the minister added a wrinkle to the government line.

"We've been clear. We're not reducing existing pension benefits," he said as he marched toward a staircase and declined any further clarification.

The insertion of the word "existing" was enough for union and opposition critics to conclude that new hires may be offered a lesser pension plan.

Committee member and NDP MP Paul Dewar, who represents an urban Ottawa riding that is home to many public servants, said the minister's use of the word "existing" was no mistake.

"They've got to be clear about what their intentions are," he said. "When he says 'existing' benefits and pensions, he's using that word for a reason."

Union leader Gary Corbett, the president of the Professional Institute of the Public Service of Canada said that in spite of the minister's attempt to address union concerns yesterday, he remains worried about what the deficit-fighting plan will mean for his members. Mr. Corbett, who has met privately with Mr. Day, said it is his sense that the government is still mulling over its options and that firm decisions won't be made until next year.

As for the possibility of offering new hires a plan that differs from the old - a trend seen in many private sector workplaces in recent years, "It would be seen as very divisive," Mr. Corbett said. "It would cause a lot of problems in the workplace."

The federal government has long used its pension and benefits package as a recruiting tool; Mr. Corbett said scaling back benefits for new hires will hurt those efforts.

Federal pensions have been thought to be in the Harper government's sights since December, when Finance Minister Jim Flaherty described civil service pensions as "handsome." He is expected any day to announce details of a cross-country federal consultation on public and private sector pensions. The process will culminate in a spring summit with the provinces to consider what, if any, new measures should be introduced to ensure Canadians save enough for retirement.

In his appearance at committee, Mr. Day alluded to these upcoming hearings.

"There will be pressures in the future on retirement plans. That's why we will have a big discussion - which will include union members and leaders as well as the private sector - to ensure that in the future the workers of Canada can continue to have confidence in their pension plans," he said.