Bill Black, former CEO of insurance company Maritime Life, says large deficits in the plans for teachers and civil servants are making pensions unsustainable. (Brian MacLeod/Facebook)

A Nova Scotia pension expert is warning that taxpayers will be on the hook for hundreds of millions of dollars unless big changes are made to the province's public sector.

Bill Black, former CEO of insurance company Maritime Life, co-authored a provincial report on private sector pensions in 2009.

Black also ran for the leadership of Nova Scotia's Conservative party in 2006.

He said large deficits in the plans for teachers and civil servants are making pensions unsustainable. Black said the time has come to deal with the Nova Scotia Teachers Pension Plan, which reported a $1.3-billion deficit in 2009.

"My view would be that it's absolutely essential that the government bring that plan to a more sensible place as part of this round of negotiations," said Black.

Finance Minister Graham Steele said the government is speaking with the teachers' union, but those discussions are separate from ongoing contract negotiations. Steele said he agrees the teachers' plan is in difficulty.

According to a 2009 annual report, the teachers' plan was 76 per cent funded with a total membership of 30,235 including active teachers, pensioners, their survivors and inactive teachers.

Black argued that even with an improvement in the plan's investments — which took a beating in the 2008 recession — factors are working against a pension plan that has already had $400 million in extra funding in previous years.

He said unless the province does dramatically better in attracting immigrants over the next 20 years, it's expected there will be 100,000 fewer people of working age than there are today.

"It should be obvious to everybody that the contributions that are being made are not enough to sustain the benefits," Black said. "The benefits have got to be changed in line with what the contributions can pay for."

He recommended a switch to target benefit plans, which provide fixed contributions while benefits are adjusted to what is affordable.

Under pension regulations, teachers who started drawing their pensions after Aug. 1, 2006 lose their cost-of-living indexing if the fund is more than 10 per cent in deficit. In that event, the province is responsible for paying half the value of the cost of living, which last year amounted to $1.4 million.

Black said what currently appears to be a trickle could become a torrent as more teachers retire.