P.E.I. to spend more, pay less to balance pensions
P.E.I. Premier Robert Ghiz and Finance Minister Wes Sheridan outlined sweeping reforms to public sector pensions Tuesday to address what they called unprecedented challenges.
Sheridan and Ghiz said the pension plans have a $400 million unfunded liability that has to be eliminated.
The changes affect five unions that represent almost 14,000 government employees and retirees.
"It is fair to current employees. it is fair to those close to retirement, and it is fair to taxpayers," said Ghiz.
Many of the changes will only impact those with less seniority, and those newly hired.
Ghiz and Sheridan said retiree pensions will not be reduced, but after 2017 pensions will no longer be tied to cost of living increases. They will instead be tied to the plan's ability to pay extra.
After 2014, pensions will be calculated according to career average salary, rather than their best three to five years.
In addition to these efforts to control spending, the government will inject an additional $25 million into the pension funds each year for the next 20 years.
Starting in 2019 employees will have to work until they're 62 to get an unreduced pension, or between the ages of 55 and 62 if the member has 32 years of pensionable service. Previously only 30 years of pensionable service was required.
The Union of Public Sector Employees, the largest public sector union, and CUPE have both come out opposed to the plan, although Ghiz has said no changes would be made without agreement from the unions.
“You try the best you can,” said Ghiz.
The government will introduce legislative changes this fall.
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