Dear members, Earlier today the provincial government announced a Memorandum of Understanding (MOU) with NLNU and four other unions that will result in changes to the Public Service Pension Plan (PSPP). Over the past two years, the unions have actively participated in discussions with government regarding pension reform, keeping retirement security for members at the forefront of these talks. Membership surveying had indicated that 88% of NLNU members believed our participation in these discussions was important. Through this consultation, the unions had significant influence on government’s announcement today and are supportive of the changes outlined. This MOU is intended to protect your defined benefit pension plan now and into the future. In my last update, I told you our pension plan was in significant trouble. The unfunded liability of the PSPP was increasing and was projected to reach $4 billion this year. The unfunded liability threatened the sustainability of the PSPP and if left unaddressed, would continue to grow. Change to the PSPP was inevitable. As sole trustee of the PSPP, government did not require the consent of the unions to make pension changes. However, government offered the unions an opportunity to take part in the pension reform discussions. We entered these discussions with the objective of having a positive influence on the final outcome. We have met our objective. The changes announced today are significantly better than what was on the table when we began this process. These changes are also a lot better than pension reform which has occurred in some other provinces. Government’s original proposals would have meant a staggering decrease in pension benefits for our members and this was simply not acceptable. With todays announcement, we have fared better than if we had not taken an active role. I am confident in saying it would have been a whole lot worse had government unilaterally legislated changes. For example: • We moved one year from best five years earnings to best six years, avoiding government’s preference for career averaging, which had the potential to reduce pensions by up to 40 percent. • The unreduced early retirement age will change from age 55 to 58. There will be a five year phase in for the age change. Government was insisting the retirement age would be increased to 60. We moved them off their position. In the final hours of negotiations, we also avoided a two-tiered retirement age, where new employees would have to work until age 60. • There is an increase in premiums which is matched by government. This contribution is still comparable to the rate for other plans in the province and elsewhere. • Perhaps the most important and beneficial element of this MOU was keeping our PSPP as a defined benefit plan. This is something that some public sector unions from other jurisdictions lost in pension reform. You may also recall local business organizations publicly attacking our pension plan, urging government to restructure the plan into a defined contribution plan instead. • The MOU also includes a framework to establish joint trusteeship of the PSPP. Once finalized, joint trusteeship will give public sector unions equal representation on the decision-making board of the pension plan. This means that never again will the PSPP be in a position where changes are left to the sole discretion of government. Sharing in the governance of the plan will give the unions equal say in all decision-making, including investment decisions and future plan changes. The move to joint trusteeship is an important step in assuring that we do not again find ourselves in a position where our pension plan is threatened. • We agreed to joint trusteeship but only if the plan was fully funded. With the changes announced today, the government has committed to make a significant payment to the plan in the amount of $2.685 billion. This will be paid over 30 years through payments of $195 million annually. These payments will be fixed and made regardless of the funding status of the plan. I realize you are still processing the news and many questions must be running through your mind - How does this impact me? How will this impact my pension when I do retire? Should I retire now before the changes take effect? I ask those close to retirement to please remember that there will be a five-year phase-in period before the early retirement age of 58 is introduced. There is no urgency to make hasty decisions on retiring now. I know this is difficult and members will want to understand how the changes specifically impact them. Information is available on government’s website: exec.gov.nl.ca/exec/hrs/pensions/plans_pspp.html , including a Frequently Asked Questions section, as well as a self-serve pension estimator which shows individual pension payments upon retirement (available as of the afternoon of Wednesday, September 3). Additional information can also be access via their PSPP information line at 709-729-3600 or toll-free at 1-844-373-9848. I encourage you to access this information to get a clear picture of how you will be impacted. NLNU has also prepared a Frequently Asked Questions document which has been posted on myNLNU and we will update this document as new questions from members arise. We are also planning telephone town hall meetings in the coming weeks. In mid-September we are having our annual Council of Presidents meeting and your branch president will be briefed on the changes. As well, we will have a pension reform session at our convention in early November. Reform to the PSPP has been a long time coming. Unions took the position that it was in the best interest of members to make every attempt to finalize this deal with the current premier. It would have been very risky to pass up the opportunity to consult on pension reform with a premier who publically stated that he supported defined benefit pension plans. As well, it is uncertain what party will form the next government once an election is held and what stand they would take on pension reform. Change will not be easy, but this MOU provides a way forward with a reduced impact on members. As more information on changes to the PSPP becomes available, we will be sure to update members accordingly via myNLNU. In solidarity, Debbie Forward, RN President, NLNU
Posted on: Tue, 02 Sep 2014 20:01:57 +0000
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