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The real reasons Four Unions accepted a Shared Risk Pension Scheme

The real reasons they (Four Unions) accepted a Shared Risk Pension Scheme and the Government’s apparent strategy to force it on PSSA Pension Members ...

The NB Pension Coalition wishes to respond to recent Op-Ed articles in the Telegraph Journal by NB Union, Nursing and CUPE union leaders.

Throughout the debate on public pension reform in the Province it has been assumed that at the very least the Government would treat everyone fairly and would not seek to turn one group of employees (or ex-employees) against another to further their own agenda. However, that is exactly what they are doing.

In the article penned by the unions involved, but more likely inspired or written by the Government, is a strategy to buy off the many small unions that are part of the actively working PSSA membership. With expired union contracts now in active negotiation, the government appears to be offering benefits or concessions they might not normally offer in return for the union leadership’s public acceptance of the Shared Risk Pension Scheme.

The actual unionized membership of the PSSA plan represent less than 1/3 of total plan members. It can sound impressive to say that the approximate 17 unions that have members in the PSSA plan have signed on. The unsuspecting public might not realize their relatively small numbers. Nor is the public likely to realize that in following their basic self-interest, unions will make decisions which favor current, not past members, and benefits today ahead of benefits like pensions, far into the future. Union leadership are very well paid and elected officers and motivated by the desire for re-election. 

Seeking a first win for the Shared Risk side from among government pension plans they gave salary and benefit increases to the current working union members of the CBE and CUPE plans. They brought large numbers of current part-time workers into the plan, increased plan benefit accrual rates for current working members, and partially bailed the plans out financially with additional special payments over several years. We congratulate the members of these plans for being able to achieve this. They somehow enticed the government to step in where they had no obligation to do so. Why?

Establishing a beachhead by getting those first two plans, desperate as they were, was worth the price.  Government was willing to gloss over the fact that unlike the PSSA and Teachers plans, the CBE and CUPE union leadership had demanded and received, some years ago, complete plan control and had assumed the risk of funding shortfalls. Government’s action in bailing out the plans was entirely gratuitous.

Herein lies the false promise of Shared Risk Pension Plans as devised by the Government’s Pension Task Force. Members of the CBE  plan in particular have to ask themselves, how do you take a plan on the verge of court imposed order to make plan changes  due to severe underfunding, then increase some benefits, then  add a bit of gratuitous government funding and suddenly the plan can fund all the benefits? This borders on a miracle. What actually happens is that after the conversion process, there is a year and possibly two when benefits are paid in full (see provisions of PBA). Then the jiggering starts and benefit reductions begin. Union leadership either do not understand what they agreed to or are hoping for that miracle. Government would not want benefit reductions to occur until after the 2014 election. All three of the unions’ leadership agreed to this deal without a ratification vote so the position of rank and file members is hard to determine. Their attitude about their deal will only be known when its full impact is felt.

Government is taking on big new liabilities under the CBE and CUPE Plans where they had no obligation beyond the moral one, to do so, while ignoring their legal obligation to the PSSA and Teacher’s Plan members.

Government’s decision to rescue the CBE and CUPE Plans was kind to the members but makes no sense in light of their stated desire for fiscal relief from pension costs. Increasing some benefits makes less sense. But maybe it does make sense if it is more important for the Government to be able to say, ‘these groups accept the wisdom of shared risk pensions’. The union’s article extolling the virtues of Shared Risk Pension Schemes is one of the prices to be paid for the benefits received.

The NB Pension Coalition does not seek to denigrate the decisions of either the CBE or CUPE Pension Plans or their associated Unions. We simply want to point out that their public intervention in a matter that is not their concern is unhelpful. If Shared Risk works for them, then they have been wise in doing what they did. We believe, however, that the financial situation in the PSSA Plan is vastly different. Not perfect by any means, but very different. In keeping with the Premier’s statement to the effect that ‘one size does not fit all’, in relation to pension reform, we believe  that to be very true as regards the PSSA and the Teacher’s plan as well. 

Given the strong and very public opposition to converting the PSSA Plan to the Shared Risk Scheme, overcoming that resistance has become almost an obsession for Government. Although the Teacher’s turn will come, all the focus of Government at the moment is crushing opposition by the NB Pension Coalition to the PSSA conversion.   Government’s strategy will be to attempt to isolate the NB Pension Coalition. They will use salary and benefit bargaining chips to entice the many small PSSA unions into a public acceptance of a PSSA Shared Risk Pension Scheme. The law states that the PSSA Pension Plan terms cannot be collectively bargained, even while the Government will be effectively doing so.  They will also ignore the fact that the great bulk of plan members are either retired or working but not members of any union. Union leaders know well who pays their salaries and it is not non- bargaining and retired plan members. They demonstrate repeatedly that retired plan members, even if union members at one time, will be sacrificed to gain benefits for dues paying members.   Government’s strange approach to the whole pension issue coupled with the current approach with doctors raises the question of why confrontation is so often chosen over a more conciliatory and consultative approach.

The NB Pension Coalition has said repeatedly that it is not opposed to pension plan changes (reform) to make plan benefits more secure. Neither do we believe that the PSSA Plan is in the dire financial straits as claimed by Government. The same is even truer of the Teacher’s Plan.  It is our belief that government can still find a solution that honors its pension commitment to retired plan members and still meet its objectives.    

Commentary has been written by Cyril Theriault with assistance of other coalition members – Co-Chair of Technical Committee on behalf of Pension Coalition NB.