The head of the finance committee on St. John's city council said a decision to halt unmatched payments to politicians' pension plans will work well for the city.

On Monday, council voted to end the current arrangement under which the city pays all the contributions to the councillors' pension plan, with the councillors themselves not having to invest anything.

Starting in the fall, newly elected councillors will not be able to join the existing plan. Instead, they will be paid an additional six per cent in salary, which will be earmarked for an RRSP.

Any councillors who are re-elected can opt to stay in the plan, although their salaries will be reduced to help cover the cost. Alternatively, the councillors can elect to move to the new system.

Coun. Danny Breen, who chairs the city's finance committee, said the changes are overdue.

"There has been some recognition that councillors believe that they should be contributing to the pension arrangement that they had," Breen said. "It was felt after the analysis provided by our consultants and discussion that this would be the way to move," he said.

Council is grappling with other broader pension issues, too, involving its employees and retirees. The city has an unfunded pension liability that has exceeded $100 million, and is growing.

The new format for councillors takes effect on Oct. 8, a few weeks after municipal elections.