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CHRIS MORRIS    Telegraph Journal - FREDERICTON  09 APR 2013

(Please note the Coalition posted a story with almost the exact opposite title ... ... please check it out after reading this!)

A member of New Brunswick’s pension task force says the provincial government is moving ahead with pension reform at just the right time to take advantage of lessons learned in other jurisdictions.

Paul McCrossan, an Ontario actuary and former Tory member of Parliament, said New Brunswick retirees shouldn’t be concerned about problems in the Dutch pension system, which was used as a model for reforms in this province.

Base benefits for government retirees in the Netherlands have been reduced by 0.5 per cent this year and there are warnings more cuts may be coming.

Administrators of the Dutch plan are blaming low interest rates and increased life expectancy for the decision to reduce benefits.

McCrossan pointed to the extreme fiscal crisis that has rocked Europe as the key reason for the low interest rates. He said Dutch pension administrators now realize their plan, put in place about 15 years ago, does not have proper risk management procedures in place.

“Their system works really well, but talking to them we identified a number of issues where they themselves felt that if they were designing the system now rather than 15 years ago, they would have designed it differently,” McCrossan said in an interview.

He said New Brunswick also will be able to get ahead of what he called the “mortality shift” with its pension reforms.

The world is in the midst of an unprecedented increase in human longevity that started just after 2000, McCrossan said, adding that longer lifespans are causing huge headaches for plans like the Dutch model and the Ontario teachers’ pension plan.

He said that while many plans face challenges from sustained low interest rates, the teachers’ pension plan faces unique challenges related to long-living retirees.

Longevity rates for teachers are among the highest in the country, and the pension plan now has 2,800 pensioners over the age of 90, including 107 who have reached or passed age 100.

“We decided we had to get ahead of the mortality shift,” McCrossan said.

“So all of the plans that we converted and all of the plans we are proposing to convert use the most recent mortality information available. The thing that caught the Ontario teachers and the Dutch plan in terms of mortality, we think we have got ahead of it. That is really important because this is a huge development that is affecting all pension plans in the Western world.”

Premier David Alward lauded the Dutch model when he announced the new shared-risk plan last year and urged unions to consider switching to the system to cut costs and secure long-term pension stability.

Among other things, the Tory government said both New Brunswick and the Netherlands face similar economic and demographic challenges, including an aging population, growing life expectancy and market returns that are not keeping pace with payouts and indexing.

The New Brunswick Nurses Union, the NB Union, hospital workers with the Canadian Union of Public Employees, and the cities of Saint John and Fredericton all have embraced the shared-risk model to date.

“Do you know something? I am very proud that we took the Dutch model as a basis on which to build, but we strengthened the Dutch model for a New Brunswick model,” Alward told the legislature during a recent question period.

“I am very proud to say that the current conditions that have impacted the Dutch model would not impact the New Brunswick model.”

Meanwhile, a group of public sector retirees have formed the Pension Coalition of New Brunswick and are organizing resistance to the shared-risk model.

Coalition co-chairman Bill Ayer, a retired civil servant, said in a news release Tuesday a growing number of pensioners are attending meetings being held around the province to warn people about the pitfalls of the shared-risk model.

The group has blasted the government for not sufficiently consulting pensioners about the changes. As well, its members point to the lack of any reports from the pension task force, which was appointed three years ago with a mandate to look at private-sector plans.

“Where is the data that shows this plan to be the way forward? If it’s such a good deal, why all the secrecy surrounding the calculations?” Ayer said.

McCrossan said the pension task force has done some work on a final report, but said the three-member group keeps getting pressed into action to deal with pension emergencies.

“We have been directed from urgent project to urgent project to get them solved,” he said.

“The question Sue (Rowland) asked the government was, ‘Do you want a shelf improvement project, meaning do you want a report or do you want the problems solved before they break out?’ The government’s answer was it’s more important to solve the problems than it is to get the report out.”