Saint John unions anxious for pension decision
About 1,800 Saint John city employees and retirees are anxiously waiting to learn the fate of their ailing pension plan this fall when the legislature reconvenes.
That's when a decision is expected from the provincial government on a city proposal to pay down the estimated $129 million owed to the workers' pension plan.
Jamie Hachey, president of the Saint John Police Association, said it has been frustrating waiting so many months to get word on the pension plan.
He worries the province will force tough measures on the city that will lead to reductions in benefits for those officers who are not yet retired.
"Over the last year, year-and-a-half, anyone that's eligible to retire or approaching retirement is scrambling out the door as fast as they can," he said.
"That's not good. It throws the teeter-totter from a balanced situation. We have x amount of workers contributing and x amount of pensioners drawing. When that gets out of whack, it's not a good situation either. It doesn't assist in the deficit that's owed."
'Over the last year, year-and-a-half, anyone that's eligible to retire or approaching retirement is scrambling out the door as fast as they can.' — Jamie Hachey, Saint John Police Association
The police and many other city employee groups reluctantly agreed to take concessions earlier this year to ease the financial burden on the city, allowing management to put together a rescue proposal for the pension plan.
Among the concessions, a two-year wage freeze, reductions in benefits and requiring new employees to work until the age of 60 before retirement, according to Hachey.
But in June, the province asked city council to modify its reform proposals. At the time, Mayor Ivan Court said the province had concerns about the proposed reforms over the long term and wanted the city to look at some other ideas.
Council wants to delay topping up the fund and spread out the deficit payments to make them more affordable.
25-year amortization unheard of
As it stands, provincial rules do not permit terms longer than 15 years.
James Pierlot, whose company Pierlot Pension Law in Toronto advises pension administrators and employers, believes 25 years is a long time.
"I have not yet seen any situation where public sector plans have looked for an amortization period of 25 years, or any plan has looked for that," he said.
Having said that, Pierlot doesn't seem to think it would be a problem.
"The danger [of extending the time period] would be, if for some reason the city became unable to support the pension payments.… To date in Canada, we haven't seen any instance that I'm aware of of a city, or a provincial, or a federal government becoming so fiscally challenged that they cannot meet their obligations," said Pierlot.
"So the answer to that question [of whether there's any danger to extending the time] depends on whether you think that the city is over the long term at some kind of risk of going bankrupt essentially."
Pierlot said the plan is not overly generous compared to many other public sector plans, particularly when it comes to managers and high-income city employees. He said it is slightly more generous toward low-income workers, but no one is getting rich off of the plan.
A revised rescue proposal is now in the hands of the government, but more concessions may be required, said Deputy Mayor Stephen Chase.
"We have to go back and ask the employee groups to reach deeper into their pension pockets and give up more," he said.
Meanwhile, Hachey contends the unions already signed collective agreements and could end up back at the bargaining table.
Saint John's pension deficit is increasing by about $750,000 a month.
Without reforms, residents could face a 12 to 14 cent tax hike, or up to $10 million in service cuts. Saint John already has the highest tax rate in New Brunswick — 1.785 cents per $100 of assessed value.