A top New Brunswick union leader says he has no regrets about signing on to the province's new shared-risk pension model, which is facing mounting criticism from retired civil servants.
Finance Minister Blaine Higgs has been confronted by hundreds of angry public servants at a string of public meetings in the last month designed to inform retirees about the proposed changes to the pension system.
Many of the retirees are complaining they have not been properly consulted on the switch to a shared-risk model.
Gordon Black, the regional director of the Canadian Union of Public Employees, said he understands why civil servants are worried about the pension changes, but he said the new plan is still the best option.
"There's potential loss here for them and they're on fixed income and they retired expecting something until they die and that's changing. But the alternatives could be, in my opinion, worse," he said.
Last year, when Premier David Alward announced the new pension model, hospital workers, who are part of CUPE, were among the unions that signed onto the shared-risk plan.
Since that time, others have also adopted the shared-risk model, including the cities of Saint John and Fredericton. As well, New Brunswick has hosted a national policy conference on the future of pensions.
Under the plan, retirees will not get cost-of-living increases in years where the markets perform poorly.
The provincial government has said only in an extreme, depression-style crash would benefits be reduced.
The system would also see those cancelled increases paid back to retirees later when the markets recover.
During the public meetings, Higgs has told the audiences that he is embarrassed about the poor communication surrounding the switch. But he said the changes are necessary for the financial health of the province and the long-term survival of the pension plans.
Pension reforms needed
Black said he has come to understand what is motivating the provincial government to make the pension changes.
"It took me a long time to accept the fact that the government is up against it financially," the CUPE leader said.
But Black said large pension deficits and retirees who are living longer and collecting more in pensions are putting the whole system at risk.
He said it's better to adopt a system that won't see benefits cut unless there's an extraordinary depression-style market crash and even then benefits would eventually catch back up.
"When things stabilize and come back, retroactive payments are made to retirees to give them what they should have got in the first place," he said.
In fact, Black said hospital workers who have retired since the plan was adopted last year have seen better pension payments under the new plan than they would have under the old.
The finance minister told crowds showing up to hear about the pension changes that in the last provincial budget he had to book $53 million in additional liabilities because of new mortality levels in the pension program.
The Public Service Superannuation Act (PSSA), which covers employees who work directly for government departments and NB Power, currently has a $1 billion shortfall.
It included 13,441 pensioners as of March 31, 2012. Their average annual pension was $20,603.