No matter what happens to revamped Canadian Wheat Board, its retired employees will still receive indexed pensions.
The federal government gave $348 million last year to cover CWB’s “legacy liabilities,” including pensions and pensioners’ benefits. Some of those funds were used to purchase a $150-million indexed group annuity buy-in from Sun Life Financial, the CWB recently announced.
“No matter what happens in the future with the wheat board, they can rest assured if anything needs to be fixed up with the pension plan Sun Life will be the one there to guarantee that pensioners get their money,” said Brent Simmons, Sun Life’s senior managing director.
The deal, which covers current CWB employees as well as already-retired wheat board employees, is good news, said Bob Roehle, past president of the Canadian Wheat Board Retirees’ Association.
“It sounds like they’ve been good to their word in terms of ensuring that the pension is sound going into the future,” Roehle said. “I expect Sun Life will be around a lot longer than the CWB.”
Federal legislation requires the CWB to be privatized within four years or wound down.
Purchasing the annuity is good for the company too because it reduces its future risk, said Andrea Carlson, CWB vice-president of corporate finance and strategy.
In the short term, Sun Life will provide lump sum pension payments to CWB to distribute to pensioners, but the company wants to turn the administration over to a third party.
Meanwhile, retired employees of the Canadian International Grains Institute (Cigi) got some bad news. While their pensions are safe, their health-care benefits have been reduced and life insurance cancelled, although pensioners received some cash in lieu of their life insurance.
Cigi can no longer afford the skyrocketing costs of benefits, said Earl Geddes, the institute’s executive director.
Ottawa refused to provide a legacy liability payout similar to the CWB, he said. Cigi’s 15 retirees agreed to the cuts earlier this year.
“We had a responsibility to our retirees, we’ve dealt with it and we’re moving on,” Geddes said.