Feds back down
Martin announces formula financing changes
NNSL (Oct 04/99) - The Northwest Territories has received a temporary reprieve.
When Bill C-78 passed through Parliament on Sept. 14, the federal government had essentially offloaded the responsibility to fund the employers' part of federal government employee pensions onto the GNWT.
On Sept. 29, Finance Minister Charles Dent announced that the federal Finance Minister Paul Martin had committed to providing interim funding through the formula financing agreement.
That commitment means the federal government will offset the GNWT's costs associated with the Public Service Superannuation Plan.
"The changes under Bill C-78 will result in us having to pay higher employer contributions," said deputy minister Margaret Mulhorn.
"Without additional funding we would not be able to make those payments."
Mulhorn said Martin's commitment means the federal Department of Finance is prepared, on an interim basis, to provide funding under the formula financing agreement to allow the GNWT to meet higher contribution requirements.
The commitment provides the GNWT with an unspecified amount of time to review alternate pension arrangements for the public service and fully consult with employees and unions to ensure that employees continue to receive the same pension benefits at reasonable costs to both employees and employers.
The federal government maintains that it has subsidized the GNWT's participation in the plan by requiring the GNWT to match only the single rate contributions paid by employees.
According to the federal government, actual employer costs are closer to 2.25 times the rate of employee contributions.
"Federal and GNWT officials are going to have to sit down and determine what is the appropriate amount of time to allow us to resolve whatever outstanding issues there are," Mulhorn said.
"The two governments are going to have to sit down and discuss this."
As for why the federal government was ever involved in paying the employers' part of GNWT employees' pensions, Mulhorn said the practice harkens back to a bygone era.
"It simply goes back to the old days," she said.
"When the transfer of the government to the territories took place, it was one thing that was felt at the time was the most appropriate way to go about things -- to keep territorial employees in the federal pension plan. Neither the Yukon or the NWT had set up its own public service pension plan."