Blockbuster pension deal applauded by unions

James
James McLeod
Send to a friend

Send this article to a friend.

Agreement promises to wipe out unfunded liability in 30 years

For years, Premier Tom Marshall has been talking about the need to reform the province’s troubled pension plans. On Tuesday, less than two weeks before he’s set to retire, Marshall unveiled a sweeping plan which will make massive changes to the system.

Nurses’ Union President Debbie Forward signs an agreement Tuesday afternoon at Confederation Building which will lead to a comprehensive overhaul of the province’s public-sector pension plan, as Premier Tom Marshall and Finance Minister Charlene Johnson look on. The deal has been negotiated between the government and the province’s unions for the past two years. — Photo by James McLeod/The Telegram

According to government projections, the public-service pension plan — which currently has a shortfall of around $4 billion — will be fully funded in the next 30 years.

At Confederation Building, Marshall and Finance Minister Charlene Johnson announced the deal flanked by a host of union officials.

For the past two years, the government has been holding talks looking for a way to reform the pension plan, and those negotiations intensified over the summer.

The final deal means higher pension premiums for current employees starting in January of next year — about $600 extra for public servants making $40,000 per year, up to more than $2,300 per year for public servants making $135,000.

Taxpayers will pay more, too. The government will sign a promissory note for $2.685 billion, amortized over the next 30 years. The government will also match employee contributions, so as the premiums go up, so too will government contributions.

Pensions will now be calculated based on an employee’s best six years instead of best five, and pension indexing will be frozen until the unfunded liability is wiped out.

The government will also rejig retirement eligibility, with employees having to work longer to receive the same benefits, but that will be phased in over the next five years.

Current retirees’ benefits are not affected.

At the announcement, though, union leaders were happy about the changes, because it means they keep a defined benefit pension plan.

“This is a very good deal,” NAPE (Newfoundland and Labrador Association of Public and Private Employees) president Carol Furlong said. “Government had an opportunity to unilaterally legislate changes.”

The other thing which is making unions happy is that they will now be given a say in how the pensions are managed.

The government will introduce legislation this fall which will set up an arm’s-length corporation to run the pension fund. The government will appoint half the members of this new entity’s board, and the unions will appoint the other half of the board.

“Now there will be a team of experts who will tell us — and both our union representatives and government representatives will be at the table to make the decisions when the decisions need to be made,” Johnson said.

The joint-management structure is something that union leaders were also very excited about.

“Under joint trusteeship, we won’t have to go to government and say, ‘please, let us at the table,’” Newfoundland and Labrador Nurses’ Union president Debbie Forward said. “We’ll never again look at a government and say that they can make unilateral changes. We will have ownership of the plan.”

The joint-management agreement also means that pension shortfalls will be shared 50-50 between taxpayers and public servants. If there’s an unfunded liability in the future, it’ll have to be made up half by increased contributions from the government, and half from higher premiums or lower benefits for workers.

The announcement comes as Marshall is just about set to retire, and rumours are swirling that Johnson is set to resign any day now.

Marshall seemed to briefly allude to Johnson’s impending departure during the news conference.

“I cannot over-emphasize enough the contribution that Minister Johnson has made to this process,” he said. “I thank her, in particular, for putting her private life on hold to stay here and see this through to the end.”

The public-sector pension plan is the biggest, but there are four other pension funds that the government still wants to restructure.

Johnson said talks are ongoing with the province’s teachers to deal with their pension plan — which is also massively underfunded.

The judges’ pension plan, the uniformed services pension plan and the MHA pension plan are also on the government agenda for reform.

When it comes to those reforms, Johnson said she wants to see a joint-management structure similar to what the public-service unions have agreed to.

Marshall said that protecting the defined benefit structure for pensions was important to him, and that current pensioners would not see their benefits clawed back. He said those principles should continue through the negotiations on the other pensions.

 

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: Newfoundland and Labrador Association of Public and Private Employees

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • Corporate Psycho
    September 03, 2014 - 20:51

    If Furlong had a set she would have let the government legislate it instead of caving in and signing a crappy deal.

  • A.
    September 03, 2014 - 14:52

    What about those people in Nfld who retired six years ago. Living only on subsistence OAS and GIS, it is about time Newfoundland & Labrador instituted a pension for those people too.

    • rupert pumpkin
      September 03, 2014 - 21:58

      I'm just curious what type of work did you retire from? Did you pay into any plan?

  • Wally
    September 03, 2014 - 08:21

    In the end it will be the non union members of NL who will pay for this blockbuster deal! Time to get out of Dodge.

    • Eli
      September 03, 2014 - 14:56

      Careful you don't ride perched facing the horse's ass on your way out.

  • Wally
    September 03, 2014 - 08:20

    In the end it will be the non union members of NL who will pay for this blockbuster deal! Time to get out of Dodge.

  • retired
    September 03, 2014 - 08:19

    All the government has to do is bargain in good faith and keep Darin King away from it and they can accomplish anything. The fear we all have now is that King is going to get involved in the Newfoundland ponies that are coming to the island and will turn them into asses.

  • Charles Murphy
    September 03, 2014 - 08:07

    Question, This agreement between Union's and Government, Is it in the " Best " interest of people's has a " Whole ". That the question. I'll wait until the Liberals make their opinion known, before I passes on my own.

    • Roy
      September 03, 2014 - 12:09

      Forget BF Hutton, we're waiting on Charles' opinion.

  • Ev
    September 03, 2014 - 07:49

    I'm a little confused,they say this will not affect existing pensioners and then they say the existing indexing will be frozen.It sounds like pensioners WILL be affected.Unless they mean new pensioners in the future will not get indexing.They should make that clear.

    • Dolf
      September 03, 2014 - 14:33

      What indexing? Remember Danny telling us it wouldn't happen under his watch? Regardless if it was passed to the arrogant Dunderball or the useless Marshall, this pack of incompetents is still owned lock, stock, and barrel by Danny.