P.E.I.'s finance minister is seeking a solution to an unfunded liability in the civil service and teachers pension plans that is approaching half a billion dollars.

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The pension funds have been hurt by two different, unrelated issues, says Wes Sheridan. (CBC)

As it stands, taxpayers are responsible for covering the shortfall. Finance Minister Wes Sheridan has committed $23.1 million a year over the next decade, but that is only a partial solution. A working group that includes union representatives has been appointed to fix the problem.

"The group is working at this time and they are putting solutions forward and we are gathering all the information that we can," said P.E.I. Teachers Federation president Gilles Arsenault.

A spokesperson for UPSE, the largest government union, would only say it is in negotiation with the government to ensure the future stability of the pensions in the face of this significant shortfall.

Unfunded liability

Teachers: $160,937,000

Civil Service: $275,063,000

Total: $436,000,000

Sheridan said the pension funds have been doubly hit. The worst problem is there are now fewer workers per pensioner.

"Where it used to be seven to one it's now closer to two to one," he said.

"And of course we're looking at interest rates at a very, very low rate. Markets have not responded since the 2008 collapse."

The two pension funds are currently making payouts to more than 4,400 former government employees.  In 2011 the average annual pension for a retired teacher was just more than $27,000, and about $15,700 for civil servants.

Opposition MLA Steven Myers wonders why the province waited so long to do something to stabilize the pension funds.

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The province is already broke, says Progressive Conservative MLA Steven Myers. (CBC)

"It's got to be a big concern for the province. This province is already broke," said Myers.

"Why did the government wait until 2012 to talk about this… They waited until it ballooned into a nearly $500 million unfunded position, and then said OK I guess we'll deal with it now."

Other provinces are facing similar problems. They have increased the age limit to draw a pension and asked employees to pay more into their plan.

"Everyone's looking at ways to change that original deal, and how do we make it so it's sustainable and predictable into the future," said Sheridan.

Sheridan wants a solution by the fall.

Corrections

  • The total unfunded liability is $436 million, not $446 million.
    Aug 22, 2012 11:04 AM AT