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Pension coalition says it is poised for legal action -Times Transcript

Group wants mandate from retired civil servants to negotiate or begin legal fight against government's proposed shared-risk pension plan

BY ALAN COCHRANE

Moncton TIMES & TRANSCRIPT 09/19/2013

The New Brunswick Pension Coalition is poised to take legal action to fight the provincial government's idea of switching to a shared-risk pension program but is looking for moral and financial support from retired civil servants.

The coalition sees the government's proposed move to a shared-risk pension program as a 'quick fix' that will immediately erase the pension fund's $1-billion deficit from the province's books. But coalition spokesman Clifford Kennedy, a retired civil servant, said it is not fair for people who are already retired to shoulder this burden and risk losing a good portion of their income because of government mismanagement.

'They have legislated these pension plans,' he told reporters after the meeting. 'We had absolutely no choice. When we were first hired in government, it was by law that we had to contribute on a bi-weekly basis. We did not have the choice to go out and invest in the market ourselves. It was against the law. So government implemented the program. The funds are performing well. It has nothing to do with us. These are deferred earnings.' Kennedy said the pension changes will affect about 33,000 retirees in New Brunswick. That includes about 13,500 retirees from the Public Service Superannuation Act (PSSA), about 8,000 teachers and 11,000 others, including provincial judges. The changes could also affect widows and widowers of civil servants who receive a portion of their deceased spouse's pension.

Yesterday, about 200 retirees attending an information session in Riverview gave members of the coalition a standing ovation and cheered at the idea of legal action to stop the proposed plan. Among those in the audience were Liberal MLAs Roger Melanson of Dieppe and Bernard LeBlanc of Memramcook. Melanson told reporters that the Liberals are watching the situation closely and feel it is unfair for civil servants who worked their entire careers thinking their retirement funds were secure to be hit with this change now that they are too old to return to the work force.

During the meeting, the coalition circulated ballots asking pensioners whether it should try to make a better deal with government or pursue legal action to stop the government from making the change. Kennedy estimates a lengthy legal challenge could cost about $200,000.

The ballots are being circulated during a round of public information hearings being held across the province by the coalition. Kennedy said the ballots would be counted next Thursday at the NBTA building in Fredericton.

The shared-risk pension system transfers some of the investment risk to pensioners, meaning their cost of living increases would no longer be guaranteed, and there is also a chance that their base benefits could also go down.

Kennedy said the coalition was formed in February to examine the effects of going to a shared-risk system. The provincial government provided $20,000 to hire retired actuary Robert Blais to examine the financial implications of the system.

In his presentation, Blais said retirees have good reason to be upset because they had been told that their pensions would be guaranteed and now they are being told that could change. He said the shared-risk pension is a good system, but the problem is when you change it on employees who have been told that their pension earnings would be guaranteed. Blais said the provincial government contends it can't afford the pension plan as it exists now, and the billion-dollar deficit makes it harder for the government to borrow money and pay off its growing debt. Blais compared governments to people who live paycheque to paycheque and find themselves in big trouble when faced with financial emergencies. He described the switch to a sharedrisk pension as a 'quick fix' to get the plan's deficit off the books, now and for the long term.

'Could the government have done it differently? Just change the plan for the people who are still active and leave the retirees alone? Yes, that would have cut the costs, but they said they still couldn't afford that,' Blais said.

Kennedy said the coalition believes the change is discriminatory and is seeking a mandate from those affected to either go back to the table and try to negotiate a better deal or begin legal action against the government in what could be a precedent-setting case. But Kennedy said it appears Finance Minister Blaine Higgs has no intention of negotiating, so he urged members to cough up donations for the legal fund.