The St. John’s Board of Trade stated in a news release today it is calling for immediate action and a timeline to implement pension reform.
The statement comes following an announcement Thursday that meetings were held last week between the provincial government and representatives of the Public Service Pension Plan (PSPP) and Teachers’ Pension Plan (TPP).
The board of trades says Premier Kathy Dunderdale has been quoted numerous times, during the meeting of Atlantic Premiers, in the Globe and Mail, in the throne speech, the 2013 budget and the 10-year sustainability plan, talking about moving pension reform forward.
“The province has been talking about pension reform for some time now and presented the concept of pension reviews in this year’s budget and sustainability plan,” says board chair Denis Mahoney.
“However, the board is concerned that a lengthy and uncertain process will mean greater debts and liabilities for you and I.”
The Canadian Federation of Independent Business (CFIB) also said today it welcomes the provincial government’s announcement on pension reform.
A news release notes CFIB does not want to see the benefits that employees and retirees have already earned to be taken away. However, it is necessary to ensure that the taxpayer no longer bears the burden and risk associated with these pension plans.
As a result, the government and unions must discuss the adoption of defined contribution plans for public sector pension plan members. Further, members of the House of Assembly should show leadership by example and convert their very generous pension plan to defined contribution plans.
Dunderdale noted Thursday that there are 25,000 retirees in the PSPP and the TPP. 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.
The government has hired actuarial consultants to do high-level pension related analysis and will share all information with stakeholders.
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.
The board of trade said people of the province pay $900 million each year to pensions, the unfunded liability of which totals more than $5 billion when benefits liabilities are included. That’s nearly 65 per cent of the province’s debt. Quebec and Newfoundland and Labrador face the biggest pension risk among Canadian provinces due to large shortfalls in their pension funds, ratings agency Moody’s says.
“The need for swift action is paramount for our membership of more than 880 businesses, and should be of concern to every Newfoundlander and Labradorian who will end up paying their share of the growing unfunded liabilities to public service pension plans because that’s where our tax dollars will have to be directed,” Mahoney says.
The CFIB noted the provincial government should adopt legislation to allow for Pooled Registered Retirement Plans (PRPPs). There are a number of employees in Newfoundland and Labrador who do not have a pension plan because their employer simply cannot afford to provide one. PRPPs are a low-cost, administratively efficient, and voluntary option that small business owners can utilize to provide them and their employees with a pension plan.