Officials with the City of Regina say they have found a way to tackle a deficit in their employee pension plan that was approaching $300 million.
The deficit has been building over the years and reached $293 million in 2012. The plan covers about 6,700 city workers, non-teaching school workers, health region employees and library staff.
On Wednesday, the city announced it had finalized a letter of intent with stakeholders that would address the deficit.
According to the city, the deficit would be handled with the following changes:
- Pay off the deficit over 20 years, as opposed to the 15 years currently required (this needs provincial approval).
- New special payments, with employers to pay 60 per cent of the contributions required to fund the deficit and the remaining 40 per cent to be paid by active employees. (The city did not say how much those contributions would be.)
- No benefit increases while the deficit is being paid off.
- Changes to the pension formula: Years of earning calculation will changed from average of three years to average of five consecutive years; Overtime excluded from calculation; Pension eligibility changed to "Rule of 85" (age plus years of service), from "Rule of 80".
- Cost of Living Adjustment (COLA) will available under certain conditions but not guaranteed (for future pensions).
- Mechanism to ensure no funding issues in the future.
The city also noted that current benefits would not be affected by any of the changes.
The city added that before any of the changes can be made, a number of approvals and legislative requirements, including a new bylaw, would have to be in place.
The city expects the approval process could take them into 2014.