Retirees vow to punish Tories over pension reforms
Switch to shared-risk model could hurt Alward government in 2014 election
A group representing retired civil service workers is vowing to punish New Brunswick Progressive Conservatives at the polls next fall if they don't withdraw pension changes introduced in the legislature.
"We want a reversal before the election," said New Brunswick Pension Coalition co-chair Bonny Hoyt-Hallett at a packed news conference in Fredericton on Wednesday.
Finance Minister Blaine Higgs introduced legislation Tuesday to force 33,000 current and former civil servants out of their defined benefit pension plan and into a new "shared-risk" model devised by the Alward government and unveiled 18 months ago.
The new plan shifts more costs to employees and restricts the growth of their retirement benefits.
According to government information about the plan, employees will have to increase their own contributions to the pension plan by 30 per cent or more starting next spring, even though benefits they can accumulate will be less generous.
"What the government calls risk sharing is more risk dumping," said Bernard Dussault, former chief actuary of the Canada Pension Plan, who has been assisting New Brunswick retirees with their fight.
New Brunswick Liberals who lived through a frightening meltdown of the current pension plan's investments in 2008 and initially supported the idea of reform are now opposed to the government's changes.
On Tuesday, Liberal MLAs bellowed a collective "nay" when Speaker Dale Graham called for a vote on the legislation's first reading.
Liberal MLA Victor Boudreau criticized the changes during a testy question period exchange with Higgs, despite his own experiences with the dangers posed by the current pension plan.
Boudreau was minister of finance in the former Liberal government of Shawn Graham in 2008, the year $1.6 billion evaporated from various provincial pension funds during a worldwide financial metdown, requiring a special $133 million payment to shore up the plans and turning his projections of a budget surplus that year upside down.
It was clear at the time pension losses were posing a serious threat to the government's finances with Boudreau uncertain of how bad it might get.
"If market returns improve over the remainder of the year our pension expense will fall," he told the legislature in a sombre fiscal update in December 2008. "However, if they worsen, our pension expense will increase."
Markets eventually did improve and the funds regained everything they lost and have since added nearly $2 billion on top of that, but Progressive Conservatives say financial risks posed to the province by its pension obligations and investments remain.
Meanwhile, Green party Leader David Coon is calling for the government to abandon its planned pension changes and to start over.
"We need facts and figures that define the problem in a rigorous manner," said Coon.
Retirees say they don't disagree changes are needed, but object to the fix Alward government has settled on.