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March 1 letter to Premier Alward from Coalition

March 1, 2013

Hon. David Alward Premier of New Brunswick Centennial Building PO Box 6000 Fredericton, N.B.  E3B 5H1   Dear Sir:

I am writing on behalf of the Pension Coalition NB/Pension Coalition N.-B., an unincorporated association of New Brunswick public service pensioners and their spouses, to express our concerns about your announced intention to convert current public service pensions to what you have referred to as the ‘shared risk” model. We regret having to resort to correspondence, but we have not been consulted in relation to this major change, and we want to ensure that you are fully aware of our concerns and of the implications of what you are seemingly proposing to do.

We strongly object to the apparent proposed removal of the existing government guarantee of our pensions, and to the removal of our earned cost of living increases.  We have many reasons. Firstly, it is clear in law that pension benefits, even those governed by public legislation, are earned benefits forming part of every individual’s contract of employment, and are not merely an expression of current employment policy or legislation.

Pension benefits are fully earned during the employment period and are contractually enforceable during the benefit period in accordance with the terms under which the benefits were earned. [See: J.D. Irving, Limited (Sussex Sawmill) v. Wayne Douthwright and Workplace Health, Safety and Compensation Commission, 2012 NBCA 35 (CanLII)] 

Secondly, a cost of living adjustment is as much an earned, vested pension benefit as the right to receive the base pension amount. The purpose of a cost of living adjustment is to protect retired members from inflation over a period of time. It is a contractual protection against the reduction in the value of their income for a group of persons who can no longer bargain an increase in their wages. [See: Quinn v. New Brunswick (Finance and Human Resources), 2011 NBQB 182 (CanLII)]

Thirdly, as guarantor and plan administrator of our public service pensions, the government has a fiduciary obligation to ensure that pensioners receive what they are due under the terms of their pensions and it is not only an abdication, but a betrayal of those fiduciary or trust obligations to pursue legislation that negatively impacts those pension benefits. [See: Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6 (CanLII)] That is why governments in the past which sought to introduce legislated public service pension reforms, have invariably legislated only in relation to future public sector pensionable employment, and have not affected existing, vested pension rights.

Fourthly, we feel that the proposed legislation (insofar as we currently understand it) is a draconian, disproportionate and completely excessive response to any problems in future public sector pension plan funding. There are better ways to accomplish your economic objectives in the public sector, while leaving existing pensions intact.

Fifthly, to purport to expropriate the earned rights and pension funds of existing pensioners, who are a vulnerable and disadvantaged group entitled to protection under section 15 of the Canadian Charter of Rights and Freedoms, is to discriminate against that group disproportionately to the impact on existing employees, at least those with employment of shorter duration who have the option of taking their skills elsewhere and making other provision for their retirements. Retirees are not in a position to negotiate new pension terms as part of their contract of service, or to withdraw their services.

Public servants have always made the pension contributions required of them by government under the Public Service Superannuation Act, having elected to create the problem at the expense of public sector pensioners, and if there is truly a problem with the funding of pensions under that Act, it is not a problem of our creation. However, government now apparently proposes to solve this problem at our sole expense. We are prepared to do our part as New Brunswickers to the resolution of all New Brunswick’s fiscal problems to contribute through higher taxation, but we object in the strongest possible terms having to pay disproportionately for a problem which was not of our creation. Be aware that if the legislation proceeds as apparently proposed it will be attacked, and in our view will be struck down on contractual, trust and constitutional grounds.

However, rather than waging a legal and political war against the government, we would much prefer you to table legislation which we can support, simply by grandfathering existing pensions and vested pension rights that have accrued through pensionable public service prior to the coming into force of the legislation.

For this reason, this letter is being sent to you alone and will not be released to other government or opposition members or to the press, pending your prompt and positive reply. However, if we do not hear from you by March 16, 2013 we will re-examine our options.

Yours truly,

Bill Ayer, Chairman Pension Coalition NB 675 Golf Club Rd Fredericton, N.B.  E3B 7S5