06/16/2015 12:31 EDT | Updated 06/16/2016 05:59 EDT

Newfoundland and Labrador announces deal on teachers' pension plan

ST. JOHN'S, N.L. - The government of Newfoundland and Labrador says it will provide a promissory note worth $1.8 billion over the next 30 years under a deal it has reached to sustain a pension plan for the province's teachers.

The agreement between the province and the Newfoundland and Labrador Teachers' Association will also see both parties become joint trustees of the pension plan.

The province has agreed to make special annual payments of $135 million starting at the end of August next year to cover liability shortfalls in the plan for all existing retirees and 50 per cent of its active members.

Active members will take responsibility for the remaining 50 per cent through changes to the pension calculation formula.

To help achieve a full funding target for the plan, members’ contributions will increase by two per cent starting Sept. 1, which will be matched by the provincial government.

Premier Paul Davis says without the changes the plan would have affected the province’s net debt and the deal protects defined benefit pension plans for about 98 per cent of its members.