11/19/2013 10:28 EST | Updated 01/25/2014 04:01 EST

New Brunswick government introduces changes to public sector pension plans

FREDERICTON - Government workers in New Brunswick would pay a greater share to cover shortfalls in their pension plans under legislation introduced Tuesday by the provincial government.

Before introducing the bill, Finance Minister Blaine Higgs said the government had reached memorandums of understanding on pensions with unions representing two-thirds of the bargaining units in the public sector, but the Canadian Union of Public Employees isn't among them.

Higgs said change is needed to address a $1-billion deficit for the public service pension plan, which has required $673 million in special payments over the last 20 years.

"This pension didn't just become in trouble," he said.

"This is a good day for taxpayers and for our pensioners, our current employees and future employees because we have a model that is sustainable, it is affordable and it will survive through generations."

The bill covers 17,000 current employees and 13,000 retirees.

Under the changes, premiums for employees would rise to about 8.25 per cent of their salaries from about 6.6 per cent.

The province's contribution would rise to 12.5 per cent of salaries from 9.5 per cent, but Higgs says that should eliminate large special payments that the province has been making each year. It was estimated that the province would have to pay about $1.5 billion in special payments over the next 20 years if no changes were made.

Higgs said the base level of pensions will be protected and retirees should get at least 75 per cent of cost-of-living increases. He said that could go to 100 per cent in years when the return on investments allows it.

But Higgs told the legislature there is no guarantee on the cost-of-living increase. Under the current plan, pensioners are guaranteed the full cost-of-living increase.

Bonny Hoyt-Hallett of the New Brunswick Pension Coalition said she worries pensioners could lose any gains that are made and be left with only the amount they have now.

But Finance Department spokesman Brendan Langille said every cost-of-living increase will be compounded, raising the base level of pensions every year.

Outside the house, Liberal Leader Brian Gallant said the government needs to release the reports it used to make its decision on the pension changes so that a proper debate can be had.

Earlier Tuesday, Higgs announced he had the support of a majority of unions representing public servants for the changes he is proposing — which includes unions that represent nurses, hospital workers and court stenographers.

But the provincial wing of CUPE expressed concern over the changes, saying it only works for some unions.

Danny Legere, president of CUPE New Brunswick, said only 10 per cent of his members in the plan support the pension changes.

"This is like taking a chainsaw into surgery," Legere said. "It's a drastic move for this plan."

Legere said the union is looking at its options to oppose the government's changes.

Once the legislation is passed, the government plan would be the ninth in New Brunswick to fall under the so-called shared-risk model. Others include professors at the University of New Brunswick and municipal pension plans for the cities of Fredericton and Saint John.