Fredericton is once again squaring off with its unions over employee pensions as the city's plan is facing a $39-million deficit.

Fredericton is in the process of approving pension reforms that would end the full indexing of pensions to the inflation rate. Instead, a proposal would index pensions to two-thirds of the inflation rate.

Another contentious element of the reform package is to stop counting overtime hours as pensionable benefits.

The new pension plan passed its second reading on Monday and the amendments come back to Fredericton council for a final vote in two weeks.

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Coun. Jordan Graham voted against the proposed pension reforms saying the plan is too expensive. ((CBC))

Coun. Jordan Graham, who was one of two councillors who voted against the plan, said the taxpayers still cannot afford the amendments.

"All revenue comes from the taxpayer. You're going to see an increase in the contributions of salary, which comes from the taxpayer. And you're going to see an increase in the contribution in the city topping it up. And that comes from the taxpayer. It all comes from the taxpayer," Graham said.

"Taxpayers weathered the same financial storm as the city employees did. But the taxpayer can't go out and say, 'Time for you to top up my pension fund.' So it's not fair that the city employees are expecting the same."

The city backed off of its planned pension reforms  last fall.

A memo was released in October to all Fredericton city employees stating that cost-of-living indexing will no longer apply to future pensions. However, that plan was postponed after the city council asked staff to reconsider its options.

New Brunswick's capital city isn't the only council having trouble coming to grips with mounting deficits in their employee pension plans. Saint John has also been forced  to freeze wages and cut benefits to deal with its $129-million pension deficit.

Union frustrated by reforms

Fredericton's employee unions are still trying to get the city's politicians to alter the proposed pension amendments.

Wade Kierstead, president of Canadian Union of Public Employees Local 3864, which represents 56 technical and professional employees, said it's not fair for the city to stop counting overtime hours in employees' pension benefits.

"The only thing we have some concern with right now is re-defining pensionable contributions, pensionable earnings so that it takes away overtime and things like that from being considered as pensionable," Kierstead said.

"Because there's a lot of people who that makes a significant amount of their pension for, such as snowplow drivers and people like that."