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PENSION PLAN OPPOSITION GROWS

Rejection Five hundred professionals within public service inform province they won't sign off on new plan

CHRIS MORRIS  - LEGISLATURE BUREAU

FREDERICTON - Another group is saying "no" to the provincial government's shared-risk pension model.

Chris Titus, president of the New Brunswick Crown Prosecutors Association, said Monday about 500 professionals within the public service, including prosecutors, have decided to turn down the new pension arrangement unless it can be altered to better reflect their earnings.

The Tory government is promoting the European-style shared-risk model as a means of making public sector plans more affordable for taxpayers and sustainable for pensioners.

"We're not signing the thing," Titus, a Crown prosecutor in Saint John, said in an interview.

He said that what really "sticks in the craw" of Crown lawyers and prosecutors is the fact that under shared risk, pension payouts would be based on career averages rather than the best five years of earnings, which usually means the last years of employment.

"You could start as a prosecutor at, say, $50,000 and you could end up as high as let's say $130,000," Titus said. "So there is quite a spread there. It has a tremendous impact on pensions at the end of the day." He said the professionals involved include Crown prosecutors, Crown lawyers - who generally work in the civil service - engineers and veterinarians. He said the Professional Institute of the Public Service (PIPS) is bargaining agent for the groups and is expected to put at a news release in the near future concerning the pension issue.

"We're not like some others in the PSSA (Public Service Superannuation Act). Let me use an example: Say a guy who drives a truck, he may start at $30,000 and end his working days earning $45,000. There's not as much of a spread," Titus said.

"But in our situation, based on the actuarial figures we have through PIPS, we will pay as much as $4,000 to $5,000 more for 18 to 20 per cent less in benefits. So it is pretty hard for us to accept that." In addition to the professional employees, Titus said all non-bargaining employees in the public service are facing the same issue, including managers, deputy ministers and assistant deputy ministers.

He said the PIPS groups have informed the government of their position.

"We basically said, 'If you can come up with an auxiliary plan that bridges that gap or that says, OK, you will get as much as the truck driver in terms of the spread,' we might be able to work it out," he said.

"Under the old system, you'd get $1, and under the new system the truck driver will get 95 cents. Under the old system, we get $1 and under the new system we'd get 85 cents. We're saying, 'If you can bring us up to the average here, we would probably be OK with it.' But they won't commit, other than that they recognize it as an issue and they're going to deal with it. But not in a timely fashion from our point of view." The New Brunswick government's plan to convert public sector pensions to the shared-risk model has been accepted by some but is getting the cold shoulder from others. A group of public sector retirees have formed a coalition to fight the changes.

In simple terms, the new approach means that the employer and workers split the benefits when their plan is performing well and share the costs when it does poorly.

The shared-risk model was officially introduced by the government on May 31, 2012, with three public sector unions and one private sector union signing onto it.

The three public sector unions are the New Brunswick Nurses Union, the New Brunswick Union of Public and Private Employees representing the paramedical and specialized healthcare professionals and the New Brunswick Council of Hospital Unions, which is under the umbrella of the Canadian Union of Public Employees.

As well, the cities of Saint John and Fredericton have embraced the model.

If applied to the PSSA pension plan, as the government intends, shared risk means that future base benefits, indexing and other ancillary benefits for current and future retirees will be conditional on the financial health of the pension plan.

Cost-of-living increases will be provided only to the extent that funds are available for such benefits.

As well, the New Brunswick government will no longer be the sponsor or owner of the PSSA pension plan. Its role will be limited to making matching contributions only.

Finance Minister Blaine Higgs has said it would be wrong to ignore the challenges facing the PSSA, noting the province has an obligation to consider the long-term sustainability of the plan both for current and future retirees.

"Currently the PSSA has a $1-billion shortfall that is expected to get worse. With people living longer after retirement and interest rates at historically low levels, action needs to be taken today." The two largest public sector pension plans have yet to sign onto the shared-risk model. The PSSA pension plan has 20,000 active members and 13,400 retirees and an annual pension payout of $280 million.

The other union that has yet to sign on is the New Brunswick Teachers' Pension Plan with 10,000 active members and 8,500 retirees, and with an annual pension payout of $260 million.