MLAs briefed on troubled public pension
Earlier retirements and longer lives are part of the issue
The province's main public sector pension funds was the subject of a detailed briefing for the Legislature's Public Accounts Committee.
The funds are in serious trouble and a newly-formed group is now looking at ways to fix them.
Wes Sheridan, the committee's treasurer, has appointed a working group of bureaucrats and union representatives to find ways to fix the plan.
Tuesday’s presentation was a dense and complex presentation by Terry Hogan, the province's pension manager.
The presentation was an important one for the Public Accounts Committee, taxpayers, as well as the teachers and public servants who want to maintain their pension plans.
Hogan says the plans have an unfunded liability of $436 million. Under legislation, taxpayers are responsible for covering $231 million of that.
That's why earlier this month, Sheridan said he would make a $23.1 million payment into the funds every year for the next 10 years.
"The only cash that would be coming would be every year they'd have to borrow the $23.1 million and put it in," Hogan said Tuesday.
Hogan explained that while the pension funds seem rich, they have almost a billion and a half dollars in investments, the rate of return has been flat and even showed a drop of 17 per cent in 2009 because of the recession.
But there's another problem.
"People are retiring earlier and living longer, so that's driving our long-term costs up, we've got a shorter work period within which to accumulate assets," Hogan said.
All these factors have led to the large unfunded liability and the need for the $23.1 million annual payout top up the pension plan.
Hogan says there are a couple of options to consider.
"We're looking at anything and every thing, including what does it mean if you retire later? Does that help? It definitely helps, but there are other solutions as far as paying higher contributions," Hogan said.
Steven Myers, the Conservative Finance Critic, chairs public accounts and he says it’s serious, but he’s not sure what should be done.
"I'm not the finance minister, so it's certainly not my decision on how we roll forward, but by the sounds of it today, all those things are on the table, the [retirement] age, the contribution structure is on the table," Myers said.