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Hansard Transcripts of Pension Discussion in the Legislature - Nov 12 2013

Pensions

M. Albert : Le ministre des Finances est déterminé à mettre à exécution le modèle de régime de pension à risques partagés et à l’imposer aux fonctionnaires et aux retraités. Une des critiques à l’égard des actions du gouvernement est que ce dernier n’a pas considéré d’autres réformes de régime de pension. Le ministre des Finances peut-il nous expliquer pourquoi il n’a pas sérieusement considéré d’autres sortes de réformes avant de mettre à exécution le modèle de régime de pension à risques partagés? Hon. Mr. Higgs: Thank you for the question. I would like to point out that a lot of work was done in advance of going to the task force and understanding what the best model was. This continues to be validated daily.

Just recently, in the past week, we have heard that the Danish and Dutch pension plan, which is the one on which this was modeled, is exceeding all expectations of return on its investment. It has rebounded from the European recession that has gone on over the past several months or years, and it is withstanding the pressures of volatility in the marketplace. This is a proven pension plan. It is a proven one for sustainability and reliability for pensioners, current employees, and future employees. It is a plan that New Brunswick can afford, unlike the current situation. It will be there when our employees need it and when the pensioners need it, and that is our goal.

M. Albert : Une autre inquiétude identifiée par rapport au modèle de régime de pension à risques partagés est la gouvernance et la gestion du régime. La Société de gestion des placements du Nouveau-Brunswick a fait un bon travail avec la gestion du régime lors de moments économiques difficiles, et les frais de la société sont modestes. Le ministre des Finances est-il prêt à garantir, et je dis bien garantir, que les régimes de pension seront toujours gérés par la Société de gestion des placements du Nouveau-Brunswick et non seulement pendant une période de temps indéterminée?

Hon. Mr. Higgs: I would guess that if the members opposite had their way, we would have a moratorium on this or we would appoint a task force or a Queen’s commission. We would do something to avoid doing anything. We want to keep NBIMC as part of the program. It has done a good job, and the current contract says that it will be there for five years minimum as we sort out the whole governance model. In addition, I want to say that all the current members that have signed up are working on a governance model right now to ensure that they can work with NBIMC. NBIMC is part of this governance committee, by the way. It is looking at the best model going forward, using best practices in the industry, to ensure that we get the best returns on the best pension plan with the best investors possible. That is our goal. We do not sign up with anyone and say that we will invest with them for life. We expect returns on investment that meet our standards, and we expect performance. I am sure that NBIMC will be able to deliver. Thank you.

M. Albert : Le ministre des Finances a maintenant indiqué que les prestations de base des retraités seront protégées. Cela a été annoncé partout, et une lettre a été envoyée à chaque retraité. Le ministre des Finances va-t-il admettre que les augmentations futures du coût de la vie ne seront pas ajoutées aux prestations de base? Si c’est bien le cas, pourquoi pas?

Hon. Mr. Higgs: We sent a letter out to all retirees to be very clear on our position. It was one of the issues that was identified during our extensive consultations, and it was one of the issues last spring, when my colleagues and I met with many of the pensioners. We realized that it was an emotional issue—that their base benefit, the money they are receiving today, might be at risk of going down, albeit so slightly.

We have taken that off the table. We have decided to say: You do not ever have to worry about your pension plan dropping from the value that it has today when we convert to this model. Now, in addition to that, your plan will increase yearly, based on the cost of living and a formula that is very well identified—a formula that has a very high reliability of 75%. The plan is actually funded to achieve 85%. In addition to that, it has the ability to go to a full 100%. There are not any plans like that in the country. Most of the plans have a fractional cost of living that does not have the ability to go to 100%. This plan has the best of all worlds, and we are proud to be pushing it forward. Thank you.