The New Brunswick government introduced legislation Wednesday to transfer five of its public sector defined benefit pension plans to shared-risk plans, saying the move will ensure the sustainability of plans that have become unaffordable.
“They were not designed to have cases where [employees] might work the same amount of years that [they are] retired,” said Premier Blaine Higgs during a government briefing. “They are not sustainable and require significant tax money.”
The legislation says the shift would be mandatory, meaning the proposed law would override provisions in collective agreements that guarantee union members a DB plan, considered the gold standard within the labour movement.
The move, which would affect 7,800 active pension plan members, has sparked outrage among the unions involved. “We have a fair pension deal in place for our members,” said Theresa McAllister, president of the Canadian Union of Public Employees Local 2745, which represents educational support staff, in a statement. “The government does not have the right to change the rules of the game halfway.”
“It’s a contract that Higgs himself advocated for. . . . This is a betrayal of the very process he championed,” said Iris Lloyd, president of CUPE Local 1253, which represents bus drivers, janitors and school tradespeople.
The three other public sector unions involved represent nurses, paramedical workers, managers and general service workers in nursing homes.
In the briefing, Higgs said his Progressive Conservative government tried to work out a deal with the unions, but it became clear talks were headed nowhere. “Unfortunately, not only were the timelines not met, but there was no indication that they would ever be met. We ran out of time.”
As the negotiations dragged on, he added, the CUPE called for a new pension plan that would have cost the province $1 billion to implement. “It would have been hugely costly for taxpayers.”
According to the province, the first step in the transfer is a negotiation process that will see those affected select a preferred plan within a certain time frame. The legislation is expected to go into effect on Feb. 1, 2024 and the government wants negotiations concluded within six months. If talks fail, the legislation calls for a mediation phase followed by an arbitration phase.
The majority of New Brunswick government pension plans were shifted to shared-risk models 10 years ago and, since then, the plans have performed well, adding 23 per cent to cost-of-living allowances, said Higgs. By comparison, the remaining DB plans — three of which the premier described as unviable — added between 16.5 per cent and 20 per cent to cost-of-living allowances.
Three of the five pension plans are currently carrying deficits that total $285 million and none are fully funded. The cost of transferring the plans — which are worth roughly $1.4 billion in assets — has been pegged at $365 million.