Pension Plan Reform Discussions Underway; Retiree Pensions Protected

Following productive meetings last week between the Provincial Government and representatives of the Public Service Pension Plan (PSPP) and Teachers’ Pension Plan (TPP) to discuss pension reform, government today announced that the pensions of retirees will not be affected as a result of ongoing pension reform discussions.

“As outlined in our 10-year Sustainability Plan, we have initiated a review of public sector pensions in consultation with our unions, similar to what has been done in other jurisdictions,” said the Honourable Kathy Dunderdale, Premier of Newfoundland and Labrador. “I want to reassure our stakeholders today that there will be no changes to the pensions of those who have already retired. This process is a cooperative effort and no changes will be made to the pension plans overnight. Our goal is to work together to ensure the sustainability of the pension plans for current and future employees.”

There are 25,000 retirees in the PSPP and the TPP. In addition to ensuring there will be no changes to retirees’ pensions, including maintaining the current indexing program, government is maintaining a health plan for retirees.

Union representatives from the Newfoundland and Labrador Association of Public and Private Employees, Canadian Union of Public Employees, Association of Allied Health Professionals, the Newfoundland and Labrador Nurses’ Union and the Newfoundland and Labrador Teachers’ Association, as well as representatives of the Public Sector Managers’ Association and the Public Sector Pensioners’ Association met last week and discussed various issues including governance.

Since the release of the 10-Year Sustainability Plan in March, the Provincial Government has engaged in a meaningful and collaborative process with stakeholders on pension reform that began with a meeting in June. In addition, government has hired actuarial consultants to do high-level pension related analysis and will share all information with stakeholders.

“We are fully committed to a collaborative and meaningful consultation process, and the meetings held last week were another step toward reforming the pension plans to ensure long-term sustainability,” said the Honourable Jerome Kennedy, Minister of Finance and President of Treasury Board. “In addition to receiving presentations on governance models and sharing information with stakeholders, we all agreed on the importance of a collaborative pension plan review process, and we look forward to future discussions.”

As of March 31, 2012, unfunded pension and other post-retirement liabilities represented approximately $5 billion and accounted for approximately 64 per cent of the province’s net debt. Since 1997, nearly $4.5 billion in special payments have been contributed to the pension plans, yet the outstanding unfunded liability continues to grow.

“These ongoing consultations reflect our collective commitment to working together to protect public sector pensions,” said Premier Dunderdale. “Together we will set a new direction for our pension plans so that all public service employees can feel confident in their future.”

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2013 09 19             1:40 p.m.