Retirees must watch N.B. pension case: Ont. lawyer
Canadian retirees should be watching a New Brunswick judge's ruling on how a pension fund can dig itself out of a massive deficit, according to an Ontario lawyer.
The pension committee that oversees the plan for 10,000 health-care workers, including nurses, is seeking guidance from the Court of Queen's Bench on how to deal with a $300-million deficit on its $1-billion fund.
Hugh O'Reilly, a Toronto lawyer that has specialized in pension benefits law for two decades, said the judge's verdict could have huge implications for retirees across the country.
If the judge rules the committee can cut benefits, O'Reilly said, the retirees of that plan and others across the country could lose their cost-of -living adjustments.
"This case has enormous implications," he said in an interview.
"You may have retired with a belief that your indexation was fully protected and this could come out and interpret vesting in a different way and could take away that right."
O'Reilly said this would mean retirees' pensions wouldn't keep up with inflation and they may end up not having enough money to pay their bills.
In addition, O'Reilly said, they may have previously agreed to lower wages or other concessions in exchange for indexing.
The pension committee is asking the court for direction about whether it can cut benefits, increase contributions or choose a combination of those two options to erase its $300-million deficit.
Justice William Grant is expected to rule on several precedent-setting issues, including whether cost of living adjustments are an absolute right.
The judge told the court this week that the pension plan faces a serious problem.
He argued the matter should be resolved by the provincial government, the New Brunswick Nurses Union and the New Brunswick Union of Public and Private Employees "sitting down and doing something about it."
The unions had made a proposal to the provincial government that would ease the deficit.
Under the proposal, both sides would put in whatever funding was necessary to stabilize the plan. It would cost the provincial government an estimated $7 million.
The New Brunswick government has not responded to the unions' proposal.
As the pension case works its way through the court, the Saint John judge is looking to get additional input.
Grant has ordered a lawyer be appointed to represent the specific interests of retirees.
The pension committee's lawyer had argued she was representing all members of the plan, including retirees. And she stressed the urgency of dealing with the matter.
But the judge said he wasn't comfortable proceeding without retirees having their own lawyer.
It's unclear when the case will resume.