Premier David Alward has tabled legislation that would move the pensions of legislature members to a shared-risk plan from their defined benefit plan.
Alward said the changes would save the province about $1.3 million annually.
"This is good for taxpayers, it's good for MLAs and members of the plan and for retirees as well," he said.
Pension benefits for elected members are currently paid from general revenues and that won't change for benefits gained until the legislation is enacted. When the legislation takes effect, members will pay into the same fund as other public servants in the province and benefits earned from then on will come out of that fund.
The government said a member can currently receive an annual pension of $20,400 if he or she has served eight years, but under the changes that would drop to $11,080.
"I will receive less of a pension than with the previous plan, but this is the right thing to do," Alward said.
Currently, a member must serve eight years before becoming eligible to receive a government pension. That would drop to just two years, but the pension would be reduced.
The legislation would also require politicians to wait until they're 65 instead of 60 before they can begin collecting their full pensions. They would also have to wait until they are 60 instead of 55 in order to collect a reduced pension.
Liberal finance critic Roger Melanson said he needs time to study the legislation but agrees with the changes.
"It has got to be representative of New Brunswick's economic and financial reality, and so it makes sense," Melanson said.
The changes would not reduce the pension cheques of former members who are vested in the existing plans, but they would receive conditional cost-of-living increases on par with what is received by members of the shared-risk plan.
Under shared-risk plans, employees take on more risk for a pension fund's performance, reducing the need for large top-up payments by the employer.
Brendan Langille, a spokesman for the Finance Department, says the new plan would put New Brunswick roughly on par with pension plans offered in Saskatchewan, Ontario and Quebec, and it will be the least generous among plans in Atlantic Canada.
The provincial government moved most civil servants and retirees to a shared-risk plan at the start of this year and it is now negotiating with the province's teachers for them to follow suit.
Other groups that have adopted a shared-risk model for their pensions include professors at the University of New Brunswick, Saint John Energy, and the municipal pension plans in Saint John and Fredericton.