Tens of thousands of provincial government workers will keep their defined benefit pension plan, but will pay more in premiums and have to work longer before retirement under the terms of an agreement announced Tuesday afternoon.

The unions will now get an equal voice at the table in a new corporation being set up to manage the public sector pension plan. That will be done in a 50-50 partnership with the government.

Both sides say the agreement is a good one, and a necessary step to secure the future for retiring public-sector employees.

"We had to, or the plans were not sustainable, and that's a word actuaries use for bankruptcy,” Premier Tom Marshall said.

NAPE president Carol Furlong told reporters she doesn’t think the agreement will be a tough sell to members.

"I don’t think I have to sell it to them,” Furlong said. “I think when people hear what the changes are they will realize in fact that this is a very good deal."

There are 27,000 current government workers enrolled in the public sector pension plan, and 17,000 pensioners drawing benefits.

The unions involved are NAPE, CUPE, the Newfoundland and Labrador Nurses’ Union, the Association of Allied Health Professionals, and the International Brotherhood of Electrical Workers.

Concessions made by both sides

There were concessions made by both sides.

Employees in the public sector pension plan will pay more in premiums and work longer to qualify for retirement.

As of Jan. 1, 2015, a worker in the plan making $60,000 will pay an additional $35 in premiums per paycheque every two weeks.

Retirement ages will stretch up to three years. Currently, unreduced early retirement is available to a 55-year-old worker with a minimum of 30 years of service. That age will change to 58 years old.

'I don’t think I have to sell it to them. I think when people hear what the changes are they will realize in fact that this is a very good deal.'- NAPE president Carol Furlong

Currently, a 50-year-old worker can take reduced early retirement after 30 years. That will change to age 53 after 30 years.

And workers will need 10 years of service to qualify for a pension, up from the current five.

There will be a five-year transitional period for those changes.

As well, indexing of pensions is suspended going forward, although past years of service are not impacted and there is no impact on current retirees.

And workers will now have their best six years of service used to calculate their pensions instead of five, potentially reducing payments.

The total value of those changes is estimated at $1.128 billion over the next three decades.

Government, unions to jointly manage plan

In return, the Newfoundland and Labrador government will make $2.685 billion in special payments to the public service plan over the next 30 years.

The plan will remain defined benefit, guaranteeing retirees stability – a key concern for the unions.

And the unions will join with the government 50-50 in a new corporation that will be set up to manage the plan.

Retirees will not be impacted by any of the changes.

'So if you’re going to make the plan more sustainable, that leaves future service, and that’s where we had to make some changes.'- Premier Tom Marshall

Those near the end of their careers in the civil service will also be largely unaffected, with the five-year transition period in place.

Newer employees will see the biggest hit from higher premiums and lengthened retirement ages.

Premier Tom Marshall said both sides needed to take action.

“We all knew that the plans weren’t sustainable, and we made the commitment that we would keep the defined benefit plan, that we would not hit the retirees in any way, hurt them in any way, and not take away any benefits that had been earned,” Marshall said.

“So if you’re going to make the plan more sustainable, that leaves future service, and that’s where we had to make some changes.”

Ballooning pension liabilities have been cited by the province’s auditor general as a big issue facing the province.

Those liabilities and other post-retirement benefits currently make up 74 per cent of Newfoundland and Labrador’s $9.8 billion net debt.

The goal is to have the plan fully funded within 30 years, although officials are hopeful that could happen much sooner.

Overall, the province’s pension plans are roughly 60 per cent funded.

Talks began in 2012, when Marshall was finance minister.

Legislation will be tabled in the legislature this fall to implement the changes.

Marshall may not be around for that – the Tories are set to pick his replacement as premier Sept. 13, and he has indicated he may retire.

The province’s teachers, who have their own pension plan, are not covered by the agreement.

“Discussions with teachers have already started,” Finance Minister Charlene Johnson said.

“In terms of the general principles, joint trusteeship would certainly be something that would be there in terms of a principle that we would want to achieve.”

Johnson is also expected to announce her departure from politics in the coming days, due to family reasons.