New Brunswick municipalities should consider forming a single, province-wide pension plan, according to the chairperson of New Brunswick's pension task force.
Susan Rowland led a pension reform task force created by the provincial government, which designed a shared-risk model that has been adopted by the provincial government and three unions.
Rowland led a similar initiative in Saint John that recommended the city adopt a shared-risk plan.
The pension expert is hoping that other municipalities will see the wisdom in a shared-risk pension plan and the merit of a larger system.
She said she hopes to see a single plan that covers all larger municipalities, similar to plans in Ontario and British Columbia.
The Ontario Municipal Employees Retirement System, for instance, is a plan grouping 947 employers and more than 400,000 municipal workers and retirees.
The pension changes backed by Rowland’s provincial task force will not cut the benefits in place for retirees and it will "likely" lead to "marginal" increases to employee contributions.
The shared-risk plan means pensions will be based on an "enhanced career average" of earnings rather than the employee’s final salary.
When Premier David Alward announced the provincial plan in May, he noted 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 provincial government’s 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.
As interest in a New Brunswick-wide experiment grows, the provincial government has still not converted its own civil service to the shared-risk model.
Human Resources Minister Troy Lifford, however, announced a national summit on pension reform this February in Fredericton
Saint John considers options
Saint John has voted to adopt the shared-risk pension model. But the city’s beleaguered pension plan has been a source of controversy in the last few years as its deficit continued to grow.
Saint John Mayor Mel Norton said the city would likely avoid joining a province-wide municipal pension plan in the short-term.
Norton said the city's plan will have to recover before it can join a group plan.
"At a point in time, when the Saint John plan is healthy enough again — and the shared-risk model will take us a large step towards that — then Saint John might be in a position to join that kind of plan," he said.
"And that could have benefits in terms of reducing the administrative costs of the pension plan."
The argument for a larger plan is that it can cut administrative costs but it could also offer better investment opportunities.