WINNIPEG, Manitoba - It now appears the next significant steps won't take place until perhaps late next year, but credit unions here see increasing hope for action on pension reform. Manitoba's credit unions are part of a coalition seeking changes in laws governing payouts from defined contribution plans. Under those plans, employees pay into their pension pool and their payments are generally matched by their employers. When an employee retires, all the money is transferred into a fund designed to actually issue a pension. What concerns members of the coalition is the amount that can be withdrawn each year is capped at approximately 7%. An example cited by Central Credit Union on Manitoba on its Web site indicates a 65-year-old retiree would receive a maximum $7,100 income for every $100,000 in their pension plan. A typical retiree with the average $357,000 in their plan would collect $25,347 a year. The issue affects more than 30,000 Manitobans currently paying into a defined contribution plan, plus some 80,000 retirees who put money into such a plan during their working years. That includes the majority of credit union employees in Manitoba. In fact, they form the province's largest defined contribution plan group. "So the credit unions themselves asked Credit Union Central of Manitoba to do some work in terms of building a coalition such as the one we have now and trying to lobby the government for change. That was almost two years ago," John Hamilton, CUCM communications manager, explains. The coalition, which in addition to credit unions includes the Manitoba Society of Seniors and other groups, argues retirees should have unrestricted access to at least the portion of the money which they themselves contributed. "Our position is (the 7 percent cap) is not enough. We're asking the government to unlock the employee contribution side of the defined contribution plan," Hamilton says. "We are working with the Manitoba Society of Seniors, and their position is they want the entire amount unlocked. I think we've taken a position the government is actually more likely to act on. The provincial government's concern is to make sure Manitobans have a pension for life. We feel a 50-50 compromise would address that concern. The way it is structured now, there are some retirees who will still have money in their account when they are 120 years old," he adds. In early May the Progressive Conservative opposition put a private members bill on the table called the Pension Freedom Act. That bill calls for complete unlocking of defined contribution plans. "I don't think even the Progressive Conservatives themselves expect the government to accept this bill," Hamilton says. "But our efforts, and those of our partners, have certainly raised the profile of this issue. We've now managed to bring it to the attention of the government in power (the New Democratic Party) and also the opposition. "It's possible that bill will die. But the government has now said they will bring forward changes in November 2005. So we need to ramp up our lobbying efforts to make certain this stays on the government's agenda and in the public eye. It's impossible to say what will happen, but I think we're all much more hopeful than we were six months ago." The biggest challenge, he adds, is education. It's a difficult concept to explain, and it's important to define the issue clearly and describe how pension plans differ. It's also tough to communicate with people in their 20s and 30s for whom retirement is pretty abstract. -

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