Saint John councillor questions the city's shared-risk pension

Saint John Coun. Susan Fullerton has many questions about the city's shared-risk pension plan and top of that list is, what does the city have to do to get a clean audit.

Fullerton is referring to the way the pension plan is accounted for on the city's books.

She said she's concerned she was not allowed to ask that, or any other pension-related question, at this week's meeting.

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Fullerton said she was dismayed council quickly moved to receive and file the actuarial valuation of the pension plan.

"I don't think we're doing the right thing by ignoring a $500-million item," she said.

In July, Jeff Cochrane, Deloitte's lead auditor of the city's books, told councillors there is "one exception" to the clean review his firm could offer on its financial statements. 

Cochrane said the firm hadn't been able to sign off on the pension liabilities in the previous year "and there hasn't been any further guidance or explanation to be able to remove that qualification from the report in the current year."

That assessment raises alarm bells for Fullerton.

In recommending there should be no discussion of the 43-page report by the pension and human resources services company, Morneau Shepell, Mayor Mel Norton told councillors "complete responsibility for the pension plan" had been placed at arm's length.

The mayor said no one from city council sits on the municipality's pension board and there is no one with the municipality with sufficient knowledge of the plan to take questions. 

Speaking afterward, Norton would not address a reporter's question about the unwillingness of the city's auditor to sign off on the pension liability.

"There's been no further discussion on it," said Norton.

"The pension issue in Saint John's been completely put to bed and very gratefully so."

On Oct. 1, New Brunswick's Auditor General Kim MacPherson raised concerns similar to those raised by the city auditor in Saint John. In her case, it was the province's financial statements that were under scrutiny.

MacPherson said she can't give an unqualified audit of the numbers, including the deficit figure, because the accounting the provincial government is using is "not in compliance" with public-sector standards.

"The public should be concerned," she told CBC News. 

A Toronto-based pension lawyer who provides advice to pension plan funds and administrators reviewed the Morneau Shepell 2015 actuarial valuation of the City of Saint John plan.

"There's been an improvement in the funded ratio of the plan of around five per cent, or so, over the past year," said James Pierlot.

"So that's a good thing." 

Pierlot says the issue raised by both the city and provincial auditor is part of a larger debate over how to account for liabilities in shared-risk pension plans.

"In a shared-risk plan, the employer does have some funding risk, because contributions may be adjusted up or down," said Pierlot.

"And so there will be some debate as to how that should be recognized on an accounting basis. And I don't think that debate has been entirely resolved."