The Hounourable Tom Marshall, Minister of Finance and President of Treasury Board, announced today government will make contributions to the Public Service Pension Plan (PSPP) to help address the unfunded liability of the pension plan, ensuring its stability and realizing a considerable savings to the province.

Minister Marshall was joined by the Newfoundland and Labrador Association of Public and Private Employees (NAPE), Canadian Union of Public Employees (CUPE), Association of Allied Health Professionals (AAHP), Newfoundland and Labrador Nurses� Union (NLNU), Canadian Merchant Marine Services Guild (Ferry Captains) and International Brotherhood of Electrical Workers (IBEW).

Government will place $400 million into the Public Service Pension Plan immediately and another $582 million by June 30, 2007. This will fund the plan to approximately 85 per cent. The public sector unions have agreed to delete all references to further special payments of $60 million annually from their respective collective agreements.

"Although it will be necessary to borrow funds in order to make the payment to the plan, this decision makes fiscal sense," said Minister Marshall. "The $60 million special payment was not covering interest on the unfunded liability. Given the province�s current borrowing rate of approximately 4.5 per cent, any funds borrowed to reduce the unfunded liability of the Public Service Pension Plan, which grows with interest at 7.5 per cent annually, will save the province approximately $27 million annually. This decision addresses longstanding concerns around the unfunded pension liability and will bring stability to this plan for our public sector employees."

"As president of NAPE, I am pleased that we have successfully reached a conclusion to the long time, outstanding issue of the unfunded liability in the Public Service Pension Plan. This is a good deal, not only for public employees, it is a good deal for the province as a whole. Public employees, through their pension contributions, contributed to the overall good of the province and it is long overdue that their pension contributions were returned to their pension plan. The deal has required a lot of effort on both sides. Without this deal our pension plan was in serious trouble. The matter is now resolved and I look forward to negotiating, with government, improved benefits for members of the plan," said NAPE President, Carol Furlong.

NLNU President Debbie Forward said this investment in the Public Service Pension Plan is great news for nurses, and all public service employees. "It is a strong, financially accountable move on the part of government that will ensure the health of the pension plan now and into the future," said Ms. Forward. "I am very pleased that we have been able to reach a successful outcome to this issue."

"The Canadian Union of Public Employees applauds government's $982 million cash-infusion into the public service pension plan," said CUPE President Wayne Lucas. "This is a strategic investment in the province's future that, we believe, will result in an upgrading of the province's bond rating, further reducing the province�s borrowing costs. The investment will bring the pension plan to a funding level that, with positive market conditions, could escalate to full funding within a reasonable period of time and create the opportunity to improve the plan benefits in a manner that we have been advocating for years."

"Government�s recognition of the unfunded liability of the pension plan and today�s influx of money to bring the PSPP up to 85 per cent funded will not only benefit our members, but the province as a whole for many years to come. It�s reassuring to see this government make such a strong commitment to the pubic service," AAHP President Patti O�Keefe.

Bob Clarke, business manager of IBEW Local 1615, said, "Pensioners under the public service plan and those looking forward to retirement can breathe a sigh of relief to see the plan on solid footing. This is a win-win for the government and pensioners alike."

Unfunded pension plans liabilities, which as of March 31, 2006, totaled $2.2 billion, are included in the $11.7 billion debt of the province. Minister Marshall said credit rating agencies have indicated that the province must maintain a sound budget strategy, including dealing with its deficit, debt and unfunded pension liabilities if the province wants to maintain current credit ratings.

"Based on professional analysis and advice, government determined that the best use of the Atlantic Accord advance negotiated by Premier Danny Williams was to address the unfunded liabilities of the pension plans, which was sufficient to increase the funded ratio to 85 per cent and secure future benefits for teachers. Allocating that money reduced the deficit of the province by $150 million annually," explained Minister Marshall. "Today�s announcement is another concrete example of the Williams government�s commitment to fiscal responsibility and debt management.

"I would like to commend the public sector unions for their dedication to dealing with the pension debt. This is certainly a positive step towards addressing the province�s debt and will help us, over time, to get on sound financial footing," concluded Minister Marshall.

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