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‘THEY HAVE NO LEGAL OR MORAL RIGHT’

CHRIS MORRIS Telegraph Journal LEGISLATURE BUREAU 06 AUG 2013

FREDERICTON – At first the names on the opinion pieces, letters-to-the-editor and emails showing up on the computer screens of editors and news reporters in New Brunswick, were only vaguely familiar.

The writers identified themselves as former public servants, the occasional deputy minister, economists, a Crown lawyer, labour and development experts – people who had toiled in the bureaucracy and were now enjoying their golden years on government pensions. (Coalition note: there are over 7,000 "hits" on the Contact your MLA link on our website, which suggest the 55 MLA's have recieved a significant volume of communication).

Except they didn’t seem happy, at least not when it came to terms like “shared risk,” “conditional indexing” and “the Dutch model.”

Premier David Alward had introduced the new shared-risk plan with great fanfare in May, 2012. It’s a European-style program designed to eliminate the province’s ongoing need to spend taxpayers’ money topping up public sector plans for pensioners who are living way too long.

The Tory government said existing public sector pension plans are too costly and cannot be sustained. Employees will have to pay more in contributions, work longer and accept less in benefits when they retire.

At first, it was not clear how the changes would affect existing retirees.

But within weeks of the government’s good news, shared-risk announcement, dark clouds were gathering in the sitting rooms and basements of retirees who did not like what they were hearing about the changes.

Many of them started contacting the news media to pass on their concerns and frustration over the lack of dialogue with the provincial government.

Those first casual meetings were precursors to the development of a group called Pension Coalition NB, which formed early in 2013.

The organization, which now has several hundred members, represents a wave of stiff opposition that the Alward government clearly had not expected. (Coalition note: membership is approx. 2,200 based on on-line registrations)

Retired deputy minister and pension expert Ernie MacKinnon says that, in retrospect, the Alward government should have anticipated trouble with the retired public servants. After all, these retirees know the inner workings of government.

“They’re the mechanics,” said MacKinnon, the first CEO of the New Brunswick Investment Management Corporation and a member of the Pension Coalition.

“The government never anticipated that anything like the pension coalition would occur. I am really impressed with that group of people. There are a lot of average folks who got together in somebody’s basement, and had the government basically grind to a halt. If the pension coalition had not existed, it would all be in legislation now and it would be over. They really impressed me in that sense. They have been strategic and single-minded and determined and have forced the government to step back.”

One of the first retirees to raise questions was David Wiezel, an expert in employment benefits from his long days in collective bargaining sessions at the University of New Brunswick and the provincial government.

Wiezel quickly sensed trouble with the province’s decision to bring in conditional cost-of-living indexation, instead of the guaranteed annual increases pensioners relied on and expected.

Annual indexing tied to the consumer price index would be gone under the new plan. It now would be “conditional” on the financial performance of the pension fund.

Wiezel called it de-indexing – a term that infuriated government officials. But for his part, Wiezel is just as adamant that the term “conditional indexing” makes no sense.

“I don’t want to split hairs and have the fight over the terminology, but conditional indexing is not indexing,” he said.

“When Blaine Higgs had his public meeting in Fredericton, I said to him ‘When I go home tonight and my wife wants ‘conditional’ marriage, should I be concerned?’ I have to give Higgs credit – he quickly responded and said ‘Marriage is a shared risk too.’ But as far as I’m concerned, a conditional offer is different than an offer. They are trying to say it’s the same thing and it’s not.”

Wiezel has stepped away from the coalition – “I prefer pitching without a manager” – but he eloquently describes the feelings of fundamental unfairness that is behind the pensioners’ anger.

The retirees believe they should have been grandfathered out of the pension changes.

“They (government officials) have every right to deal with current employees and work out solutions,” he says.

“But they have no legal or moral right to change a deal long after the deal has been done. It’s wrong. The bank doesn’t come back to you after you have paid for your house 10 years later and say ‘You know, the resale value is higher than we estimated, so now we want x number of dollars.’ It’s unthinkable and immoral what they have done.”

Clifford Kennedy, a founding member of the Coalition and official spokesman for the group, worked for the New Brunswick government for 25 years promoting economic development in places as far flung as Italy.

Kennedy said pensioners were deeply troubled by the lack of honest communication from the government about the pension changes. There were no pension task force reports they could read, and there had been no meetings with pensioners prior to the shared-risk announcement.

‘It came out of the blue,” Kennedy said.

“Everybody understood that something needed to be done. But when you consider that we are no longer working, we can no longer make additional contributions to the program and we no longer have a job, it was wrong. Our budgets are planned based on what we were told at retirement, and that includes all of the special contracts that government put in place for pre-retirement packages and things of that nature. It opened up Pandora’s box. People were saying, ‘Hey, wait a second. What’s going on here?’ ”

Despite the anger and hurt feelings, Kennedy is hopeful alternatives will come out of the government’s new willingness to work with the pensioners.

The coalition has hired an independent actuary, paid for by the government, to go over the assumptions and figures that lie behind the province’s decision to bring in shared risk.

“We are looking for alternative solutions,” Kennedy said.

The coalition also has retained the services of Ari Kaplan, a Toronto-based lawyer who specializes in pension rights, should it decide that legal action is warranted.

Brian Steeves, one of the first retirees to contact reporters and editors with his concerns, said it is very difficult for people to believe what the government is telling them about the dire need for pension reform without being able to crunch the numbers for themselves.

Steeves, an economist who worked in the Department of Finance for years, said the provincial government needs to be wide open and up front when dealing with the financial security of the elderly.

“We have yet to have a real and inclusive provincial discussion as to whether we really care if the elderly have real financial security down the road,” Steeves said.

“We have had no real discussion as to what the best options are. We seem to be experiencing government by decree rather than by consent. Where are the “white papers” for public discussion and criticism? Where are the “committee hearings” on the issues? Where are the expert reports identifying the issues and laying out the options?

“If this government really wants to leave a pension legacy which serves all of its citizens, they need to open up the discussion in terms of its goals, in terms of options, in terms of broad participation, in terms of addressing all sectors of the population and in terms of seeking informed public comment – before it uses its legislative hammer to ram through a narrow agenda.”

For his part, MacKinnon highly doubts that the outcome of talks between the pensioners and the government will result in anything other than the shared-risk pension model.

“Too many people have too much skin in the game to back off on that,” he said.

“But within that, there are improvements that can be made. I don’t think anything at the moment is cast in concrete. There are areas where I believe the government can be flexible. Both sides know what they are, and it would basically be things that would provide greater certainty.”