Let us set the record straight. The Premier is wrong on pensions.
We believe that everyone deserves retirement security in the form of a defined benefit pension plan. These are pension plans that offer a guaranteed income in retirement. Under the “shared risk” model, which the Premier promotes, retirement income is subject to market risks and fluctuations.
“Shared Risk” plans do not share risks between employers and members, as some would have you believe. The “sharing” of risks takes place mostly between active and retired members, who face the serious risk that their benefits could be reduced without limit.
The only risk on the employer is a small, limited, and temporary increase in contributions. Most risks in these plans are shouldered by plan members. The government knows this, as the Auditor General pointed out in 2015: “the Province’s position was that the […] risks inherent in the [Shared Risk] plans are largely borne by the employees.”
Our two defined benefit pension plans are modest, paying retirees an average of just $9,000 to $12,000 per year, respectively. These low pensions are a function of our low wages, which are among the lowest of government employees in the province. While the benefits are secure, owing to the defined benefit nature of the plans, they are very modest.
The Premier says our plans are “unsustainable” and therefore require conversion because of shortfalls in our plans between the value of the promised pensions and the plans’ assets. What he does not say is that these shortfalls are the clear result of the province’s deliberate choice to withhold required contributions to both plans for more than a decade.
An arbitrator recently sided with CUPE on this issue and ordered the government to finally make the missing contributions to the Local 1253 plan. Local 2745 has its arbitration hearing on this issue scheduled in the new year.
In all other provinces, where pensions have been properly funded, plans are generally in significant surpluses. In other words, Premier Higgs wants our two Locals to pay for the government’s refusal to properly fund our pension plans.
This is extremely unfair.
On our side of the table, our members have held up our end of the deal. We have always paid our required pension contributions to the plans. We have gone to work on the front-lines throughout the pandemic to keep our schools open and to keep our province’s children safe. We want to get back to doing our jobs and serving the communities that we love.
We all know that Premier Higgs had a long career as an Irving Oil executive before running for his seat. As Irving is not a publicly-traded company, we don’t know how much their executives were paid, but we imagine he did much better than the majority of workers in New Brunswick. A 2010 Postmedia story said that Higgs retired from Irving with “a company pension that should keep them secure for the rest of their lives.”
A recent Brunswick News article also cites Jim Leech, another former business executive, as supporting Higgs’ pension agenda. Leech says that we are “kidding ourselves” to expect the Province of New Brunswick to pay us the pensions we’ve been promised.
But what is not mentioned is that Leech earned more than $40 million in compensation during his years as an executive of the (defined benefit) Ontario Teachers’ Pension Plan, according to his plan’s public reports. This compensation includes a secure defined benefit pension that was estimated at $315,000 per year when Leech retired in 2013.
Higgs, Leech, and others in the top 1%, want a world in which working people are not afforded the security of a decent pension in retirement. They want to absolve employers of any real commitment to retirement security for workers. And one way to do this is to convert existing pensions to “Shared Risk” pensions.
But we believe all employers have an obligation to ensure retirement security with dignity for their employees.
And that means a reliable, sustainable, defined benefit pension plan for everyone.
Theresa McAllister is the President of CUPE Local 2745, representing educational assistants and student attendants. Iris Lloyd is the President of CUPE Local 1253, representing bus drivers, custodians, maintenance workers and engineers.
Access all of NB Media Co-op’s coverage of the CUPE strike here.
Read all about the the events leading up to the strike here.