Saskatchewan Government and General Employees Union hikes defined benefit contribution rate to 54% of wages!
Here is an interesting story out of Saskatchewan that offers an extreme example of the risks of defined benefit pension plans in the current environment.
The Saskatchewan Government and General Employees Union (SGEU) has 35 employees and a defined benefit pension plan. On January 14, 2010 the SGEU planned to increase the employee contribution to the pension plan to 54.25% of wages to help overcome funding problems. However, on January 8 the employees were able to obtain a court injunction freezing the current contribution rate of 19.6%. This contribution rate was instituted on November 5 from a previous rate of 9%. The employees claim that their employer is using the tactic of raising contribution so swiftly to pressure employees to consent to ending the defined benefit plan. The SGEU claims it is following the direction of its actuaries and the superintendent of pensions.
We will continue to follow this story as it develops.