Contributions still being accepted. Thank You!

 

MLAS to feel pension woes

SHAWN BERRY LEGISLATURE BUREAU Telegraph Journal

22 Apr 2013 07:28AM

FREDERICTON – Retired MLAs won’t be immune from the province’s push to move government pension plans into a shared-risk model Finance Minister Blaine Higgs says.

“This same program would be applied to MLAs,” Higgs said.

“It shouldn’t be any surprise to them. This is a shared model and sharing means it applies to everyone.”

Higgs makes the comments following a week that saw the province hold sometimes raucous meetings around New Brunswick where Higgs and Labour Minister Danny Soucy defended the proposal to adopt a shared-risk model for former government employees on pensions.

The Tory government insists the new model is necessary to protect taxpayers and public pensions. But employees say their former employer is changing the terms of pension plans they agreed to during their years of service to New Brunswickers.

Higgs said despite the jeers and criticism at the three meetings he attended, he left with the sense that the province can work through the issue with Pension Coalition NB, the group speaking for about 30,000 members with government pension plans that could be affected.

“My hope is that as we do that and we sit down and work with them to understand the model and how it works and how it really affects them, and not how people imagine it affects them, I’m hopeful we can work through this,” Higgs said.

He said he has asked the coalition to “consolidate a list of questions that they think their members need direct answers to that they don’t feel they have received a satisfactory answer to at this point.”

But the group representing pensioners says it doesn’t have the sense that they’re working towards an understanding of adopting the shared-risk model for pensioners.

Clifford Kennedy, a spokesman for the group, said despite the seven public meetings held last week, members still have plenty of questions about what options the government has actually looked at.

“We want to know: what are the assumptions they have used? What calculations have they made in regards to the retirees? … They did this just on a go-forward basis. What is the cost of leaving the retirees alone?”

The group, Kennedy said, wants to look at alternatives and options that wouldn’t affect pensioners.

“People will not accept a broken contract in any shape or form. Respect the retirees and if you want to do something, do it on a go-forward basis.”

The shared-risk model – the first of its kind in North America – is based on a Dutch pension program that aims to make pensions more sustainable and avoid large unfunded liabilities.

The province says its adoption would put a stop to requiring the province to consistently add millions of dollars in top-ups to make up for shortfalls in the plans. Pensioners say they are being asked to make sacrifices now because of mistakes past governments made in taking contribution holidays.

Higgs said under actuarial tests the model has shown that it would provide full pension and CPI indexing on returns above four per cent, full pension and three-quarters of CPI on returns above three per cent and full pension plus 54 per cent of the CPI on returns between one and three per cent.

The model would see losses in the case of returns below one per cent. Higgs said the modeling used shows that happening in less than two per cent of cases.

Higgs says he thinks it is clear that the current pension model is broken.

“I don’t think anybody is denying there is a problem.”

Higgs acknowledges past governments haven’t always contributed to the plans, taking contribution holidays when the assets in the plans reached the designated maximum of 115 per cent.

“I understand why they say ‘well, don’t talk to us about it.’ But we are trying to make it fair and equitable for the current employees, retirees and taxpayers.”

Higgs denied suggestions made at some of the meetings that the province has already drafted legislation to replace pensions. Legislation that has been written, he said, exists for four unions that have accepted the shared-risk model, he said.

Higgs said employees under four government contracts with the government are already moving towards the plan. They include employees represented by the New Brunswick Nurses Union, the NB Union, CUPE 1252 which represents health-care workers and the New Brunswick Piper Trades.

The finance minister said if the model had been put in place 20 years ago, pension cheques would be no different.

Pensioners aren’t so sure about that. They say they will see changes due to the way their pensions will be indexed.

They have noted that they had their benefits, which is really salary, withheld from their pay.

Higgs says the issue has to be worked through to avoid the possibility of a dramatic a pension reduction down the road.

“What we’re trying to do is say let’s start this process so that you know that your pension is secure and you know New Brunswick has an ability to pay and it’s part of our contract with the citizens of this province to get this province in a fiscal state that is sustainable.

“We have a model here that we think is fair and equitable and it needs to be looked at sincerely and with all of the facts and then let’s sit down and look at what is the best thing to do for all of the generations here. I think when everyone looks at that, they think wow, this is a pretty easy way to contribute and say our pension is secure and we can have a pension for future employees and the taxpayers of the province don’t continually fund the shortfall.”

The pension coalition says that speaks to the need for the province to give everyone a better look at the numbers.

“How de we go from a $141-million surplus that is in the government’s financial statements to overnight a $1-billion deficit. How does that happen? How does that make any sense,” said Kennedy.

The pension coalition has noted that the changes would be particularly difficult for members who have been out of the workforce and have commitments they have made based on their anticipated retirement income. It calls for changes to be made on a go-forward basis only.

Brunswick News encourages rich and vigorous debate from its customers and reserves the right to contact commenters to solicit further dialogue.