Saint John pension model questions remain
Council will vote Monday on switching to a shared-risk model
Saint John city council is scheduled to vote Monday on switching to a new shared-risk pension model, but some council members are still unsure about the change.
Council met with Susan Rowland, the chairperson of the provincial pension task force, again on Thursday night to discuss the proposed fix, which would see deficit risks shared between the city and its employees.
Coun. Bill Farren questioned whether the city should look at other options.
"I know the taxpayers can't afford to pay $16.4 million for the next 10 to 15 years," he said.
But Rowland said council doesn't have any other options.
Coun. Donnie Snook also expressed concerns about the pension reform proposal.
"One of the criticisms is — should we have a second opinion from someone, somewhere, by the way of showing some effort that we're not just taking it without any other investigations happening at all," he said.
But Rowland insisted the task force, which has been working on the issue for several months, is a strong team.
She also listed several other organizations that already use shared-risk models for their employees, such as the Ontario Teachers' Federation.
It's a system Rowland hopes will eventually include all public unions in the province.
"The idea would be to have one pension plan for municipal employees, and many other provinces do that, but one of the basic principles is that one plan wouldn't subsidize another," she said.
The New Brunswick government brought in a similar plan earlier this year.
'Worst' pension plan
Rowland has described Saint John's pension plan as the worst she's ever seen. The pension deficit currently sits at about $195 million.
Under the shared-risk model, that amount would drop to about $35 million, which could be paid off within 15 years within annual payments of $12 million, said Rowland.
The plan would cap pensionable earnings, raise the retirement age for some city workers and eliminate long-term disability benefits.
It would open the option to temporarily reduce benefits if the fund falls behind.
Cutting too many jobs could see the city paying more, Rowland cautioned.
"It's a good idea that if somebody retires then you hire somebody to take their position. So if there's a big downsizing it can destabilize the pension plan, so one of the things you have to do is you have to plan for that," she said.