Saint John faces asset seizure over pension debt

The City of Saint John is in danger of having assets seized if it does not make an overdue $5-million payment on its pension fund.

The city says it does not have the money but is considering some tough measures to tackle the fund's $129-million deficit.

The deficit has been growing for many years and was exacerbated by the 2002 stock market downturn, which saw the fund take a $92-million hit.

Actuarial predictions suggest retirees are living longer and wages rising, meaning the pension fund will have to be bigger.

The city has struggled to pay the bills and is derelict on the Nov. 15 payment.

When the city did not pay the $5 million, the trustees of the pension fund informed the province's superintendent of pensions, who enforces the Pension Benefits Act.

That set in motion an investigation that could lead to a garnishee order, a seizure of assets or contempt proceedings in early 2011.

The lawyer who represents the trustees said they do not want to make threats but have no choice because they are obligated to protect retired workers.

Taxes could rise

Mayor Ivan Court and city manager Pat Woods said wage freezes, wage reductions and benefit reductions are all on the table as ways to save money.

The city has asked the province for more time to make its payments. That would have to be approved by the cabinet.

A property tax hike of 10 per cent is also a possibility.

Andreea Bourgeois of the Canadian Federation of Independent Business said her members do not agree with increasing taxes to cover the pension deficit.

"Business owners would like to see their tax dollars being used for improving municipal services," she said. "Instead of that, tax dollars are mostly used for covering pension shortfalls.

"This doesn't attract businesses, it doesn't attract people in the city, it doesn't improve the productivity of the business and this doesn't help consumers spend more money."

The mayor said tax increases would be a last resort.