June 16, 2015
Successful Negotiations Benefit Public Sector Employees
Premier Announces Details of Teachers’ Pension Plan Reform
The Honourable Paul Davis, Premier of Newfoundland and Labrador, today announced the details of the agreement reached between the Provincial Government and the Newfoundland and Labrador Teachers' Association (NLTA) that sustains the Teachers' Pension Plan. The agreement includes a Provincial Government contribution of over $1.8 billion in the form of a promissory note to the plan, over the next 30 years, which will ensure the stability of the plan.
“The agreement we have reached with the NLTA is of tremendous significance for the teachers in our province. Through our contribution of over $1.8 billion in the next 30 years and the commitment to joint trusteeship, we are providing for the long-term sustainability of the Teachers’ Pension Plan for existing and future members. This agreement is evidence of our government’s commitment to our public service. I am proud of the work that has gone into reaching this agreement and once again thank the government’s negotiating team and the NLTA for their hard work and dedication to reaching this agreement.”
- The Honourable Paul Davis, Premier of Newfoundland and Labrador
The agreement includes the following:
- The Provincial Government has agreed to take responsibility for all of the existing retiree liability and 50 per cent of the active member liability, with special annual payments of $135 million starting August 31, 2016;
- The Teachers’ Pension Plan active members will take responsibility for the remaining 50 per cent active member liability through changes to the pension calculation formula, using the average of the best eight years salary instead of the average of the best five years for service after September 1, 2015, and the suspension of indexing for future service;
- Future actuarial surpluses and deficits will be shared equally;
- The plan will be jointly sponsored and managed by a Board of Directors as trustee, made up of representatives of the Provincial Government and NLTA;
- To assist in achieving the 100 per cent funded target, members’ contributions will increase two per cent, starting September 1, 2015 and will be matched by the Provincial Government; and
- Teachers who terminate after August 31, 2016 with less than 24.5 years of service and who choose to take a deferred pension will have to wait until age 62 to access that pension.
“This government has shown great leadership in continuing to deal with the liability associated with pension and other post-employment benefits that would have severely impacted the province’s net debt if no action was taken. With an agreement reached on the Teachers’ Pension Plan, the Provincial Government has continued its work with public sector unions to formalize agreements to protect the defined benefit plans for approximately 98 per cent of the plan members, including retirees.”
- The Honourable Ross Wiseman, Minister of Finance and President of Treasury Board and Minister Responsible for the Human Resource Secretariat
Amendments to the Teachers’ Pension Act will be introduced in the House of Assembly this week to reflect the terms of the agreement signed by the Provincial Government and NLTA.
“The Newfoundland and Labrador Teachers' Association is pleased to have signed this historic pension agreement. It represents a significant commitment by teachers and the Government of Newfoundland and Labrador to the economic security and stability of the province which is in the best interest of teachers and citizens alike. The joint trusteeship required a considerable investment by both sides. In addition to the Provincial Government's substantial contribution, teachers have agreed to pay increased premiums and reduce future pension benefits to ensure the long-term sustainability of the plan. Not only will joint trusteeship allow teachers to have a direct say in the governance and administration of the plan but it will significantly reduce provincial debt and have a positive effect on the economy. We began this process in December 2012. It’s been a long process, and I commend the government for its commitment to reaching a solution through what has been a consultative and collaborative approach.”
- James Dinn, President of the Newfoundland and Labrador Teachers’ Association
Founded in 1890, the Newfoundland and Labrador Teachers' Association is a professional organization serving approximately 6,000 teachers in Newfoundland and Labrador.
- The Provincial Government will contribute over $1.8 billion in the form of a promissory note to the Teachers’ Pension Plan, over the next 30 years, to ensure its stability.
- The agreement between the Provincial Government and Newfoundland and Labrador Teachers' Association (NLTA) provides for the sustainability of the Teachers' Pension Plan.
- The agreement also commits to joint trusteeship of the plan, changes in members’ and employer contributions, suspension of indexing for future service and changes to the average pensionable earnings formula.
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Director of Communications
Office of the Premier
Special Assistant, Communications
Office of the Premier
Director of Communications
Department of Finance
2015 06 16 10:15 a.m.