The union representing 3,700 public sector employees in Newfoundland and Labrador are rejecting a proposed collective agreement from the provincial government, saying it includes unacceptable pension concessions.

While the deal would provide workers with a wage increase of two per cent annually for two years, the Canadian Union of Public Employees Newfoundland and Labrador — which represents health-care, education, public library and government housing workers — says it also includes cuts to the Public Service Pension Plan through further integration between the defined benefit plan and the Canada Pension Plan.

Currently, at age 65, when PSPP members begin receiving CPP and old-age security, their pension benefits are reduced by 0.6 per cent, bringing retired members’ accrual rate from two per cent down to 1.4 per cent.

Read: N.L. government, unions reach deal on pension reform

In 2016, when the federal and provincial governments reached a deal to enhance CPP benefits for Canadians, both the Newfoundland government and public sector workers agreed to pay a small increase in CPP contributions to cover the enhancement. The union says the government is trying to pass their enhanced CPP contributions onto workers by increasing the bridge benefit — or the percentage of the pension they stop receiving when CPP and OAS payments kick in.

“The [CPP enhancement] allows for extra retirement money for our members . . . because it doesn’t affect their PSPP,” says Sherry Hillier, president of the CUPE Newfoundland and Labrador. “But now what would happen is that [the] enhancement they were to get under the federal government, they’re going to lose it because they’ll have to pay it under the PSPP.”

The collective agreement put forward by the provincial government includes language that would bind unions to return to the PSPP’s sponsor board — where they have half the seats — and take a position on making “adjustments” to the PSPP’s contributions and benefits.

Read: Considerations for employers around the incoming CPP enhancements

The union says it suspects the government is looking to ultimately reduce the pension accrual rate to 1.2 per cent. Based on that estimate, the CUPE Newfoundland and Labrador calculates that a plan member who began their career in 2016 on a $35,000 salary could end up earning 14 per cent less in their PSPP pension going forward.

The changes to the pension would affect 34,000 members under multiple unions. Those who earn below the yearly maximum pensionable earnings, which are currently $58,700, would be disproportionately affected. Higher-wage workers and those who are mid-career or closer to retirement would also see a smaller percentage.

“Our members deserve to retire with dignity and, in this case, that little bit of enhancements they were to receive from CPP, . . . they won’t get that,” says Hillier.

The same agreement was offered to the Newfoundland and Labrador Association of Public and Private Employees, which represents 16,000 members. NAPE accepted the deal and held its ratification vote at the end of January.

Newfoundland and Labrador’s finance ministry declined to comment.

Read: Newfoundland and Labrador reaches agreement on teachers’ pension plan

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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