The reform’s most profound changes affected retirees. Planned new provincial legislation, the country’s most sweeping pension reform in decades, would allow shared-risk pension plans to expropriate certain rights of retirees. If a fund was hit with a deficit, retiree benefits could be temporarily altered. For the four unions negotiating with the task force, the change meant both retirees’ cost-of-living allowances and other active member benefits would become conditional. If their pension fund had a deficit, the contingent benefits would be suspended until a surplus was restored. This was the benefit cut that Justice Grant had rejected when the two unions asked for his direction in 2011. Now New Brunswick was changing its laws so that all members who joined the new model would shoulder their share of the pension repair bill.
Another major change was the retirement age. It would be pushed to sixty-five from sixty. Addressing the nursing union’s concerns, this shift would be introduced gradually over a forty-year period, which meant the bulk of the union’s older workers would only delay their retirements by a few months. New employees would take a bigger hit, retiring years later than their predecessors.
Workers would also be asked to increase contributions to the pension fund. Keeping Alward’s promise, the province also agreed to increase contributions. The nurses, for example, would see their average pension contributions increased to 7.86 per cent from 5.25 per cent, a jump matched by the province.
Reforms also downsized the formula for calculating pension values. Like most Canadian plans, New Brunswick pensions are typically calculated from a base salary that reflects an average of a worker’s highest salary years. Some New Brunswick plans were so generous that workers could supersize their base by adding overtime payments. Under the new model, pension values would be calculated from a lower base, derived from a worker’s average career salary, contingently adjusted for inflation.
Overtime pay would no longer be added to the formula.
The Dutch pension system was ranked as one of the soundest pension systems in the world because it had enforced many of the standards and practices that New Brunswick was now adopting. One of Canada’s weakest provinces was building the foundations for the country’s most secure pension fortresses.
Four union leaders flanked Premier Alward when he strode onto the stage at Fredericton’s new conference centre on the morning of May 31, 2012. Walking with him was Marilyn Quinn, Susie Proulx-Daigle, Norma Robinson, and Gary Ritchie, heads of unions who were announcing their participation in the new shared-risk pension model.
Alward began the press conference by talking about the acute condition of the province’s pension plans, which he revealed for the first time were no longer sustainable. “It is not fair or realistic to expect New Brunswick taxpayers to backstop” troubled funds, he said. As a result of “unprecedented” collaboration with the unions, workers were sharing the burden, allowing the province to build a stronger system “before crisis struck.” Like so many times before in the province’s difficult history, he said, New Brunswickers had come together in the face of adversity because “we are driven by both a fiercely independent spirit and deeply rooted sense of community.”
Alward asked union leaders and Sue Rowlands, there on behalf of the task force, to walk with him across the street to the ornate Victorian-era legislature building, where he was scheduled to introduce a bill with the new pension reform laws. Expecting to watch the session from the gallery, the five were instead escorted to the carpeted floor of the Assembly Chamber, where they were given seats on a wooden bench facing Alward. After the premier gave a speech explaining the significance of the new shared-risk pension plan, which would also be applied that day to MLA pensions, Alward asked his guests to stand as he thanked them for their co-operation. As they rose, the two-storey chamber was soon filled with thunderous applause. Every attending MLA from the two elected Liberal and Conservative parties stood to give the unions and the labour lawyer a standing ovation. Stunned by the reaction, Rowlands, the hard-nosed labour lawyer, began to cry. “Other than the day I was married it was the happiest day of my life. No one was playing silly buggers with politics. New Brunswick was fixing its pensions.”
Excerpted from The Third Rail. Copyright © 2013 Jim Leech and Jacquie McNish. Published by Signal Books, which is a division of Random House of Canada Limited. Reproduced by arrangement with the Publisher. All rights reserved.Report Typo/Error