The Newfoundland and Labrador government and its major unions are close to finalizing an agreement to reform public sector pensions, CBC News has learned.

The two sides have been holding intense talks all summer and have reached agreement on key reforms to make the plans financially solvent.

The deal isn't finalized, as there's still work to be done on some key language. But there is an agreement on the broad strokes of a pension reform plan.

CBC News has learned that the unions will keep a defined benefits pension. But in return, they have agreed to an increase in pension premiums and later retirement dates.

Also, the current system of using an employee’s best five years to determine pension benefits will be replaced with a longer averaging term. That would reduce post-retirement payments.

These changes won't apply across the board, as there is protection for long-term employees and those nearing retirement. The bigger impact will be felt by new hires and less senior employees who have time to adjust to these changes and plan for retirement. 

The agreement would apply to NAPE, CUPE, the Newfoundland and Labrador Nurses’ Union, Allied Health, and the IBEW.

Aiming for deal within weeks

The goal is to finalize a deal before the PC leadership convention on the Sept. 13 weekend.

The outgoing premier, Tom Marshall, is a supporter of a defined-benefits plan, and the unions believe it is in their best interests to negotiate a deal while he is still running the government.    

The unions contacted by CBC News Tuesday had no comment, while Finance Minister Charlene Johnson issued a prepared statement.

"We continue to have intense discussions ... to find a solution on pension reform, “ Johnson’s statement noted.

"The total unfunded pension liability for public sector pensions, combined with other post-employment benefits, accounts for 74 per cent of the province's projected net debt as of March 31, 2015. This is a very serious financial issue and I am hopeful that together we can find a solution that is in the best interests of current and future employees, retirees and all taxpayers of the province."

According to government financial documents, there is a total of $7.3 billion on the province's books for pension and other post-employment benefit liabilities.