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Letter to Pam Lynch, MLA from George Nimegeers

The Honorable Pamela Lynch MLA Government of New Brunswick Fredericton New Brunswick

Dear Pam:

After over six months of investigating the pros & cons of the proposed NB Pension Plan (PSSA) revision, I have come to the following conclusions & would appreciate a few answers from you concerning the questions they present.

* Given the changing demographics, some changes to the existing pension plan may be warranted.

* The province has the right to adjust it's compensation package to existing employees, who are periodically reassessed & they can make alternative arrangements if they are not satisfied. Pensioners on the other hand, do not have this flexibility & usually do not have the opportunity to gain other employment or revenues. Do you feel it is equitable & fair to put fixed income retirees in the same category as existing employees?

* A pension agreement constitutes a contract between two parties. Changing the existing contract requires the consent of both parties. No consent has been obtained from existing pensioners in the PSSA pension plan. The province found it necessary to negotiate pension changes with some of the unions, so don't the PSSA pensioners deserve the same consideration?

* When the province consolidated the various provincial pension plans under one separate pension administration plan in the early 1990's, they inadvertently forgot to include all the payments due to the plan from the provincial contribution portion owed to past employees, and the benefits derived from investments of employer & employee pension funds. Their argument at the time was that since the province had guarenteed the retired employee's pensions, they were entitled to any excess benefits achieved through good investing. This assertion appeared to be reasonable & logical. However, when the province decided to arbitrarily change the contract by refusing to guarantee pension benefits for retirees that have completed their contract obligations to the province, the province was obligated to reimburse the pension fund for the missing provincial contributions & the benefits derived from all pension contributions (province & employee) for the duration of the contract. (Individual contracts with employees started upon employment, with the provincial contribution to the pension plan being part of the compensation package, and the employees' obligations under the contract concluding upon retirement). During the 1970's & 80's interest rates on mortgages were as high as 18% per year, with 25 year mortgages, which would double a retirement investment approximately every 5 years. These benefits were never repaid by the province into the pension fund. Do you feel the province has an obligation to repay the PSSA pension fund, at least at the borrowing rate of the province,  for the years they used employees retirement funds, if they follow through on breaking their contract with the existing pensioners?

* If the province met it's contractual financial obligations to existing pensioners & market improvements continue as they have in the past year (I understand that the pension funds earned over $400,000 ) then talks of the pension plans being $1 billion in debt was premature. In fact, even though the province never placed the benefits back in the fund that it recieved over the years due to an inflationary economy when the pension fund was consolidated, the PSSA fund has always exceeded it's financial objective of earning 4%  in every year since I have retired (15 years ago), & is self supporting for current pensioners. So, why are the existing pensioners being forced to accept additional risk on their pensions, while the province retains the majority of the benefits from previous years?

* If inflation rates ever return as those experienced in the 1970's & early 80's, which is quite conceivable with the expansion of oil & gas plus free trade with the EU, pensioners could see their pensions reduced substantially in a few years, while provincial revenues would be unaffected as tax revenues increase at the same rate as provincial incomes.

* Other jurisdictions such as Alberta have concluded that pension reform was necessary, but renigging on contractual obligations to existing pensioners was both morally and legally wrong. If the province decided to break a contract with a company after the work had been completed & then legislated so that the company could not sue the government for payment of it's obligations, the business community would be up in arms & the province would be unable to obtain any goods or services from the private sector in the future. In other words, the business community would, in short order, vote with their business as to the morality & legality of the governments actions. Contract law is recognized universally as a legal & moral obligation on the part of the participating parties. This government will revert New Brunswick back to the status of a third world country by failing to honor it's commitments to provincial pensioners.

* Once pensioners contractual rights have been removed, future governments would be free to "adjust" our pensions according to their financial priorities. NB pensioners have no choice but to challenge this arbitrary & illegal action on the part of the provincial government.

Pam, I would appreciate your comments on my observations and questions. I understand that you are subject to the decisions of the caucus, but I hope that you are getting the opportunity to express the sentiments of your constituents to them. I would ask you to please copy myself & the New Brunswick Pension Coalition on any representations you make to the government on our behalf.

Yours sincerely,

George Nimegeers