The city of Fredericton and six of its union locals are deep in discussions with New Brunswick's pension reform task force and could soon see the city join a shared-risk pension plan similar to Saint John's.
Fredericton's pension deficit is estimated to be $59 million. But Coun. Mike O’Brien, the chairman of the city’s pension board, said new, tougher pension accounting rules could push that deficit estimate even higher.
"We will experience a larger deficit than that, than the $59 million, but certainly something that would be manageable once we have a new plan in place," O’Brien said.
The Fredericton councillor said the city’s pension plan is "not in a good situation" but he said it is something the city can "tackle."
Premier David Alward unveiled the shared-risk plan last May and at the time three different unions also signed onto the plan.
Under the plan, the retirement age will also be moved upward, but it will be phased in. The targeted retirement age would be moved to 65 from 60 over a 40-year period.
The reforms would also see cost-of-living increases conditional on the pension plan’s performance.
There would be a provision that would still allow for cost-of-living increases in years where the pension plan was making money to account for any years where the increases were not imposed.
After the May 2012 municipal election, Saint John Mayor Mel Norton asked the pension reform task force used by the Alward government to review his city’s beleaguered pension plan.
Saint John switched to the shared-risk pension plan on Jan. 1 on the advice of Susan Rowland, the chairperson of the pension task force.
Saint John opted to move to the new pension system after a long debate over the financial situation of the pension plan.
The same controversy has not surrounded the Fredericton pension plan.
City unions want to protect plan
Some of Fredericton’s unions are not sold on the idea of changing pension plans.
Tom Steep, a municipal service representative for the Canadian Union of Public Employees, said the city's more than 500 unionized workers want to protect their defined benefit plan.
He said the meetings with the pension reform task force appear to be going well.
"They're getting there, but they're dotting the I’s and crossing the T’s at the current time," Steep said.
Fredericton’s police and fire locals are also part of the negotiations over the potential pension reform plan.
The pension task force has also met with city officials in Miramichi and Riverview to discuss changes to their pension plans.
The pension reform task force’s chairperson said earlier this month that all municipalities should join a province-wide, shared-risk pension plan.
There are already 44 medium and small New Brunswick municipalities sharing a single pension plan.
The argument for a larger plan is that it can cut administrative costs but it could also offer better investment opportunities.
New Brunswick would not be the only province to have a municipal pension plan. Ontario and British Columbia also have municipal pension plans.