Saint John councillors voted to scrap its controversial employee pension plan on Monday night and are now planning to replace it with a system recommended by a special task force.

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Saint John council adopted a recommendation made by Susan Rowland, the chairperson of the pension task force, to adopt a shared-risk model. (CBC)

A week after Susan Rowland, the chairperson of a pension task force hired by the city, called Saint John’s pension plan the worst she had ever seen, councillors passed a motion to move in a new direction.

Councillors adopted the so-called shared-risk model recommended by the task force, which is similar to the plan adopted by the provincial government.

The proposed pension plan would share the risk for future deficits between workers and the city and opens the option to temporarily reduce benefits if the fund falls behind.

But the pension reform package isn’t coming without an element of immediate financial pain.

The shared-risk pension plan will mean Saint John politicians must find $12 million every year to pay down the pension fund deficit, which now stands at $161 million.

The pension plan deficit is $35 million lower than it would have been had council stuck to the existing plan where future financial risk is not shared with city workers.

Coun. David Merrithew said he felt a tough decision needed to be made to deal with the pension problem.

"This debt that we have is real, it's tangible, and it's ours and we have to deal with it," he said.

The city’s pension deficit under the old system had been estimated at $195 million.

Mayor Mel Norton asked for a special pension task force to review the beleaguered pension plan shortly after May’s election and the final report was issued last week.

Norton and many councillors were elected on a promise to get the city out of its financial mess.

Groups applaud vote

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Paul Stackhouse, the president of the Saint John Firefighters' Association, applauded the council's decision to approve a pension reform package.

Under the new pension plan, city workers will be giving up some of their benefits. For instance, police and firefighters will have to work longer before retiring and will have higher payroll deductions.

But representatives from both groups were applauding the council’s decision on Monday night.

But Paul Stackhouse, the president of the Saint John Firefighters’ Association, said the pension decision ends a long process of trying to reform the system.

"I applaud this council for having the courage to step forward to try to resolve this pension issue," Stackhouse said.

"We've been working on this a long time. I applaud them for finally taking the courage to move forward and to get this pension issue resolved."

Jamie Hachey, the president of the Saint John Police Association, said the council’s decision showed "vision." 

Failed attempt to delay

The pension vote, however, was not unanimous among the city's politicians.

Coun. Susan Fullerton said she hoped for better terms on the pension deal.

She attempted to delay the vote until another pension expert could review the plan.

"I think we would be very remiss if we did not get a second opinion. If I'm going to get my house painted I get three estimates," Fullerton said.

But Fullerton’s attempt to stall the vote failed.

The city will now draft a memorandum of understanding with its employee groups to convert the pension plan to the new model.