A news release, entitled "Union support for
pension legislation", was also published on November 19, 2013
with respect to the PSSA conversion. The news release provides that
a memorandum of understanding had been signed "with unions
representing two-thirds of the bargaining positions in the PSSA,
including several CUPE locals, in advance of pension legislation
that the province will table today". Finance Minister Blaine
Higgs commented that "all members of the PSSA will soon have
the benefit of a more secure, sustainable and affordable pension
plan as a result of this legislation".
The Act includes a protected base benefit floor for members and
retirees at conversion. Under shared risk plans generally, there is
an ability to reduce base benefits in the future in accordance with
the plan's funding policy, if the required funding tests are
not achieved. The Act provides that if there ever has to be such a
reduction in base benefits under the converted plan, members and
retirees at conversion are entitled to a base benefit under the
converted plan that is no less than the value of his or her benefit
under the PSSA immediately prior to conversion with the exception
of indexing not yet granted. If a reduction below this benefit
floor is required, the Consolidated Fund will pay such shortfall.
As indicated in the press release, there have been several other
public and private sector plans in the province of New Brunswick
that have converted to shared risk under the PBA. The protected
floor under the Act is not provided to such other converted
The Act also includes certain benefits outside the PSSA (e.g., a
Special Retirement for Deputy Ministers program) and provides how
such benefits will be addressed. These other benefits are also
subject to future adjustment, and include a similar benefit
The news release provides that "the PSSA is facing a
billion dollar deficit which is expected to get worse due to
demographic realities and realistic estimates of future investment
returns". The realities facing the PSSA are not unique to this
plan. With changing demographics, and low interest rates, more
provinces have been taking a closer look at their public sector
plans and the long-term sustainability of such plans. Innovative
designs, including future cost of living adjustments becoming
conditional on plan funding, are increasingly being considered. In
order for such changes to proceed for public sector or private
sector plans in other provinces, generally new legislation is
The Act has received First Reading only at this time and
therefore is not yet law in New Brunswick.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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