Manitoba businesses and charities will be temporarily exempt from putting some money into pension plans in a bid to free up capital during the COVID-19 pandemic.
But a union leader worries the government is offering these businesses more money without any assurances that workers won’t be laid off.
Certain pension payments will be waived for the remainder of 2020 and all of 2021, Finance Minister Scott Fielding announced on Tuesday.
“Many businesses are facing challenges due to the current economic environment and lost revenue due to COVID-19,” Fielding said in a news release.
“A moratorium on certain pension payments is a temporary change we can make to support businesses and their employees that will allow businesses to reinvest these funds to keep their employees at work.”
These businesses and charities will be excused from making unfunded liability and solvency deficiency payments, which employers are normally required to make under defined benefit pension plans.
Fielding said he wants the additional money to be used to prevent layoffs at businesses.
“One of the major concerns for plan sponsors, who are not exempt from solvency funding, is the impact and uncertainty of the historically low interest rates on their special payments for the new year,” Tim McGorman, principal at Ellement Consulting Group, said in the province’s news release.
“This temporary measure will assist these businesses to manage their staffing and business operations in 2021 without the additional stress and uncertainty that additional pension funding requirements would have on their business operations.”
But Kevin Rebeck, president of the Manitoba Federation of Labour, said the government is taking the deferred wages of employees and giving them back to employers.
“While we all recognize that COVID has ravaged our economy, there’s nothing in this proposal that reassures me that employers will be required to put this money toward keeping people working.”
Rebeck said the government should impose parameters to ensure the money is spent keeping people employed.
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