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Two sides in pension reform co-operating

Chris Morris  Telegraph Journal Legislature Bureau

FREDERICTON – There is a tentative truce in the dispute between retired public servants and the provincial Tory government over pension reform.

Clifford Kennedy, a retired civil servant and spokesman for Pension Coalition NB, said Thursday the government is taking a more open and co-operative approach in dealing with concerns that have arisen over plans to transform public sector pensions into the shared-risk model.

Among other steps, the province has agreed to pay for an independent actuary who has been hired by the coalition to look closely at the government’s pension numbers and scenarios.

“It is absolutely critical for the coalition to have an independent actuary to come in and review all of the assumptions and risks that the government actuary used to come up with the scenarios that they have,” Kennedy said in an interview.

“There have been no reports and, up to now, no information-sharing. … To have this available to us is very important. It gives us a sense that there is openness now.”

Finance Minister Blaine Higgs said he welcomes the new sense of co-operation after months of escalating anger among retirees over the proposed changes.

“The public meetings had their emotional points,” he said, downplaying the fury seen at some of the sessions.

Many angry retirees have accused the government of breaking both retirement commitments and their trust. They have warned of dire repercussions for the Tory government in next year’s provincial election.

Turmoil over the shared-risk model has forced the government to slow down in its plans to convert the Public Service Superannuation Act, although there is no indication the government has changed its thinking about the need for reform.

Among other things, the shared-risk model would spell the end of guaranteed annual cost-of-living increases in the public service pensions. The employer and workers split the benefits when their plan is performing well, and share the costs when it does poorly.

Higgs said the government has nothing to hide about its pension calculations.

“They (the coalition) want to look at our assumptions and we have nothing to hide here,” Higgs said.

“I understand they want to have an independent kind of oversight in this. We want to give them the opportunity to look at the assumptions and validate why we have a situation we need to deal with. Ultimately, I hope we will find common ground.”

Higgs said guaranteed cost-of-living increases are a big issue for the government.

“To pay out cost-of-living increases that don’t exist in the market, that is a very big liability for the province,” Higgs said.

“That is what this is all about, getting to a contribution program that is realistic so you are not putting all the burden onto the employer and employees of the future and getting to a point where the pension rises with the actual cost of living as opposed to an artificial increase.”

The pensioners hope that the independent actuary, who will cost the province about $20,000, will be able to tell them the status of the PSSA plan and provide insights into the feasibility of honouring commitments to retirees.

“Naturally, we are looking at alternative solutions,” Kennedy said.

The independent actuary is expected to submit a report by early fall.