Power to the People Via “Pension Sense”
Marco Procaccini

When corporate executives invest capital, and under what conditions they feel benefit them the most, likely that money belongs to you in the form of pension and other benefit funds. Yet most often, the workers who pay into these funds are never consulted as to how these monies should be used, let alone have a say in the decisions.

The organizers and participants at a recently held forum called Pension Sense in Vancouver are hoping to change this over time—and they want to start by teaching elected union pension trustees how to develop administrative polices for their money and hold the managers and investment houses that control it accountable.

“It was a real eye-opener,” says Joe Barrett, a researcher with the BC and Yukon Territory Building and Construction Trades Council. “This has been a long time coming. It seems up until recently people’s pension money was under the total control of investment managers who made all the decisions and just told the trustees what was best.”

He said there is a growing trend, especially among union workers, to gain more of a say in how their pension money is used, especially after years of repeated corporate scandals where large sums of pension money was lost on bad investment decisions and nefarious activity by corporate executives, or simply being invested in ways that are not beneficial to working people’s general interests. Quite often, he says, workers learn that employers that engage in union-busting, mass down-sizing or child labour; or violate human rights and labour or environmental standards, are using workers’ pension money.

“For years, pension trustees have been told by investment managers that they can’t question their decisions or act in a socially responsible way because it would violate their fiduciary responsibility to their shareholders,” he said. “Well we have learned that the shareholders are the union members we represent and that we should question their decisions and demand social responsibility.”

Fiduciary responsibility, and how to interpret it, was only part of what was explained at the conference, says Peter Chapman, executive director of the Shareholders Association for Research and Education, which co-hosted the event with the BC Federation of Labour.

“(Pension) trustees from a variety of labour organizations participated in courses on corporate governance and investment fundamentals,” he said. “Pensions are very important to the labour movement, since they are about retirement security for workers. Unions have played the leading role in society in getting pension plans set up and organized and for making them successful. It only makes sense that they learn to control them and ensure they are managed responsibly.”

The conference also focused on practical examples of where union trustees have taken a leadership role in their administering their pension funds and actually improved how they performed, both in terms of social responsibility and in fiscal sustainability (the basis of fiduciary responsibility).

These included presentations from trustees with both the Ontario and California teachers retirement funds. The latter, who got control of their fund in the mid-1990s, caused a major dust-up last year among government and corporate leaders in several Southeast Asian nations, where much of their plan is invested, that they would begin a review of their investments in firms and countries that promote the use of child labour and other oppressive measures.

This proves, Barrett says, that working people are more than capable of effectively managing the large capital pools they create. Locally, Concert Properties, the BC-based unionized construction and development firm, owned by a cooperative of employee pension funds, has become one of the largest and well-respected commercial and residential developer in Canada. Barrett says this is just one practical example of what can happen when workers get hold of their pension money and use it responsibly.

“Through proxy votes at shareholder meetings, trustees can put pressure on fund managers to report clearly on what they do and justify their decisions,” he said. “If corporate bosses don’t pay attention to the guidelines the trustees set down, they can be sued for not representing their shareholders.”

But this newly growing awareness also comes at a time when many unions are fighting a rear guard defense against pressure from large corporations and elite investment houses to scrap pension funds and use the money for their own benefit.

“Today, pensions are under attack by corporate Canada,” says BC Fed Secretary-Treasurer Angela Schira.  “It is ironic that the people that brought you greedy insider dealing at Enron, Worldcom and Hollinger are the same people who think pension plans are unaffordable.”

She adds that while union members are twice as likely to have pension benefits than non-union workers, unfortunately, many workers are getting interested in democratizing the control of their pension funds just as their retirement savings are on the brink of being dissolved by their bosses.

None the less, it appears more people are becoming interested in getting a better grip on the over $600 billion in Canadian retirement savings—second only to the banks in size. The Canadian Labour Congress has made similar forums a regular part of its labour activist training programs, and numerous cooperative, small business and community development organizations are urging unions to get more interested in having a say in managing their funds.

“This is a new and innovative way for getting justice and democracy for working people,” Barrett said. “By democratically controlling our pension funds, we can influence how corporations behave. We can look to invest in our local small businesses and communities and create a stable economy that will ensure we have secure retirement benefits.”