Friday, February 17, 2012

CP seeks conciliation on legacy pension changes

Written by  Luther S. Miller, Senior Consulting Editor

Canadian Pacific on Friday requested the Federal Minister of Labour appoint a conciliator “to assist in progressing discussions on a new agreement, involving legacy pensions, with the union representing the company's Canadian train crew employees and rail traffic controllers.”

“The legacy pension costs significantly impact CP’s operating ratio and our ability to further fund investments that will support growth opportunities for our customers,” said Canadian Pacific President & CEO Fred Green. “We've made changes to the management pension plan. The time to address this within our collective agreements is now. These are difficult and complex issues for both parties. CP believes that expert, third-party support, with a focused time table, will offer the best opportunity to achieve a settlement.”

CP says it is seeking to achieve changes to legacy pension and post-retirement benefits to make them industry-comparable. CP has contributed C$1.9 billion of solvency deficit contributions to its pension plan over the past three years. “We have a number of proposed options for pension plan modifications, some of which align with the industry, all of which are fair to employees, and none of which have any impact on existing pensioners,” added Green.

CP is under pressure from a shareholder pension fund to install a new management to take steps to reduce the company's operating ratio. Former CN President Hunter Harrison is considered the front-running candidate for Green's job.