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DUNDERDALE, GHIZ STUDY PROVINCIAL PENSION MODEL

ADAM HURAS LEGISLATURE BUREAU Telegraph Journal 11 JUN 2013  

WHITE POINT, N.S. – Two Atlantic provinces are eyeing New Brunswick’s pension reforms as a potential solution to their immense pension liabilities with public servants hitting retirement age in large numbers.

The New Brunswick government is pushing ahead with pension reform in the public service despite push-back from retirees who believe the changes threaten their retirement security.

Both Newfoundland Premier Kathy Dunderdale and Prince Edward Island Premier Robert Ghiz said Monday that they are studying the New Brunswick model closely in search of their own solution.

“We are struggling with our pension liability,” Dunderdale said, speaking at a meeting of the Atlantic premiers on the south shore of Nova Scotia.

“We want to open the dialogue with all of the stakeholders because this is something that we have to deal with together.

“It is a huge problem for our province – we have put about $4 billion into our public pension plans in the last five years and we can’t do that every five years. We don’t have the means to do it.”

As part of its debt reduction plan, the Newfoundland government has committed to reviewing unfunded pension liabilities, worth about $6 billion or 63 per cent of the province’s debt.

“We are looking at best practices right across the country,” Dunderdale said. “We are certainly looking at what Nova Scotia has done and we are in a dialogue with New Brunswick about the amendments they have undertaken and the dialogue that they have started.”

The Prince Edward Island government has its own public pension struggles, last year stating that it would commit $230 million over 10 years to top up existing plans, money that will go straight on to the provincial debt.

“We are currently watching what is taking place in New Brunswick,” Ghiz said. “We are in dialogue with our unions right now, very similar to what Newfoundland and Labrador is doing.

“What we are trying to do is make sure our pension funds are sustainable. We want to make sure that we have pensions available for our workers in the future.”

The New Brunswick Tory government passed legislation in December to create the shared-risk pension plan.

The new model, already embraced by several public sector unions and the City of Saint John, proposes a new pension system to avoid large, unfunded liabilities and better protect retirement benefits for future generations.

Under the model, employers and employees split the costs when the plan performs poorly and share the benefits when it does well.

But public sector retirees are raising concerns about the loss of guaranteed cost-of-living increases, the loss of the province as the sponsor and guarantor of the public sector plans and the possible reduction of base benefits, among other things.

Alward has stated that better communication with the retirees may help sort out misunderstandings about what the shared-risk plan means for current public servants and for those who have retired and now are living on their government pensions.

Dunderdale said Monday that she believed the pension model reached a “successful conclusion” in New Brunswick, bringing the unions on board.

“We need to come to the table and resolve this issue,” she said of Newfoundland’s pension situation. “It’s criticalfor people who are relying on those pension benefits, and it is critical for the economic wellbeing of the province.

“It’s still a very troublesome issue for all of us and it won’t be easily resolved, but it’s absolutely critical that we resolve it.”

The Nova Scotia government has recently made its own changes, transferring its public service superannuation plan to a joint trusteeship composed of employers, employees and retirees.

That trusteeship will have limited scope to change annual contributions, so benefits may have to be amended to fit contributions if circumstances are adverse.

The moves hope to address existing shortfalls, including the Nova Scotia teachers’ pension plan, which has an unfunded liability of more than a billion dollars – the volatility of the world markets in recent years contributing significantly to that shortfall.

“We have already dealt with ours and we are good where we are,” Dexter said on Monday.