NAPE and other public sector unions reach an agreement with government on pension reform | National Union of Public and General Employees

NAPE and other public sector unions reach an agreement with government on pension reform

The highlight of the agreement on pensions is a commitment to establish joint trusteeship of the Public Service Pension Plan.

logo for the Newfoundland and Labrador Association of Public and Private Employees (NAPE)St. John's (04 Sept. 2014) — The Newfoundland and Labrador Association of Public and Private Employees (NAPE/NUPGE), along with four other public sector unions in Newfoundland and Labrador, have reached an agreement with the provincial government to make the Public Service Pension Plan (PSPP) sustainable.

Public sector unions work with government to ensure public service pension plans remain sustainable

At the request of the government, NAPE/NUPGE and the four public sector unions entered into negotiations earlier this summer to find a solution to the significant growing unfunded liability of the Public Service Pension Plan (PSPP), covering some 27,000 public sector employees and 17,000 retirees.

Even though over the last decade the government provided $1.6 billion in special payments to the PSPP over and above employers’ matching contributions, the last actuarial evaluation of the plan showed that it had a shortfall of nearly $3.2 billion, a much higher amount than the unfunded liabilities of other plans in Atlantic Canada and the rest of the country. The total unfunded pension liabilities and other post-employment benefits in Newfoundland and Labrador's public sector were projected to account for 74 per cent of the province’s net debt as of March 31, 2015. PSPP represents 58 per cent of that liability.

“NAPE/NUPGE wanted to have input into changes because if not, we knew the results were going to be disastrous for our members,” said NAPE President, Carol Furlong. “We had to be part of THE solution to this significant unfunded liability, knowing government could unilaterally make changes that would end up being major concessions for plan members. In the end, it's fair to say that NAPE/NUPGE had significant positive outcome on these discussions. Most importantly, we were able to retain the superior defined-benefit plan for our members.”

A highlight of the agreement is a commitment to establish joint trusteeship of the plan, meaning that both government and members will share responsibility for the plan equally.

Unions negotiated a long sought-after victory: Joint trusteeship

National Union of Public and General Employees (NUPGE) National Secretary-Treasurer, Larry Brown, who participated in the negotiations, noted that the joint trusteeship agreement will be extremely important for NAPE/NUPGE and its members.

“No longer will the plan be subject to unilateral legislative changes by government. NAPE/NUPGE and its members will have now have joint ownership of the plan and will from hereon in have an equal say on any changes being contemplated to the plan." Brown added, “Jointly trusteed plans tend to be better managed and funded. In fact, where our component unions have joint trusteeship, the plans tended to fare better than others in 2008 and the post-recession period. Many of our jointly trusteed plans are fully funded, or even in a surplus position.”

Other changes made to pension plan to ensure stability for the future

Other parts of the agreement include a contribution to the plan by government of $2.7 billion, amortized over 30 years. In return, NAPE/NUPGE and the four other public sector unions have agreed to plan changes and contribution rate increases with a value of $1.13 billion.

The changes include the following:

  • matching contribution increases of 2.15% of all pensionable earnings for all plan members and an additional 1.1% for the portion of pensionable earnings above the year’s maximum pensionable earnings
  • future service to be calculated using the best six year average earnings. For existing employees, past service will be calculated on the basis of the higher of the frozen best average five-year earnings or the best average six-year earnings
  • early retirement with an unreduced pension at age 60 with a minimum of 10 years of service or age 58 with a minimum 30 years of service
  • early retirement with a reduced pension at age 55 with a minimum of five years, age 53 with a minimum of 30 years, or age 59 with 29 years, including a five-year transition period
  • employees who will meet the current early retirement provisions or have at least 30 years of service at the end of the five-year transition period will be grand-parented under the current early retirement rules
  • eligibility for a pension and at least 10 years of service will be required for entitlement to other post-employment benefits, such as health insurance, with a five-year transition period for existing employees
  • indexing of benefits will be suspended until such time as future trustees determine the plan can afford it
  • current retirees will not be affected by plan changes.

More information:

NAPE information on the pension reform agreement

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

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