Proposed pension law turfed by unions, teachers' association
Plan's CEO says concerns inaccurate
Shane Magee
Northern News Services
Published Friday, October 10, 2014
SOMBA K'E/YELLOWKNIFE
Two unions and the NWT Teachers' Association have come out strongly against a proposed law dealing with public sector employee pensions, saying the bill places too much risk on employees and must be rewritten.
Objections to Bill 12, the Northern Employee Benefits Services Pension Plan Act, range from the power it gives the minister of finance to the way it changes the nature of the pension plan to a lack of prior notice and consultation on the bill.
Those opposed to the bill packed a public consultation meeting on Sept. 25 by the legislative assembly's Standing Committee on Government Operations.
Hundreds of employees with the City of Yellowknife and 13 other municipal governments, community housing authorities and community organizations, such as land and water boards, are members of the pension plan while MLAs are not.
Gayla Meredith, president of the teachers' association, wrote in a submission she is "very concerned" about parts of the bill, writing that it changes it from a defined benefit plan to a target benefit plan.
A defined benefit pension plan sees the employer promise specified monthly benefits upon retirement based on a formula with factors such as years of service and the member's final average salary. The targeted plan means the benefits could be reduced to maintain the pension plan in tough economic times.
A bulletin sent to members of the pension states the bill will not change the benefits provided and it won't increase costs.
Shawn Maley, CEO of Northern Employee Benefits Services, said Tuesday that he was shocked by what he heard at the public meeting.
"I was surprised at the lack of understanding of the bill since it was a public document since March," Maley said.
He said the concerns raised in the public submissions and at the meeting simply don't reflect the actual content of the bill.
"We have protected the pension promise for those in the plan," he said.
"This is a direct attack on retirement security for employees," Meredith wrote. "Target benefit plans are not 'shared risk' plans, but a transfer of risk to employees, and this cannot be supported by the (teachers' association)."
Meredith wasn't available for comment as of press time.
"Bill 12 is theft," stated Mary Lou Cherwaty, president of the Northern Territories Federation of Labour, in a written submission to the committee, going on to recommend the bill be scrapped altogether.
A submission by the Public Service Alliance of Canada, representing 1,000 members of the plan, suggests legal action and labour unrest could follow passage of the bill in its current form.
"Bill 12 fundamentally changes the nature of NEBS and the pension promise that members and retirees have relied upon for their working careers," reads an unsigned submission from the union.
Representatives of the two groups were not available for comment as of press time.
Maley said those concerns have never been raised and the groups have not reached out to discuss the bill with Northern Employee Benefit Services (NEBS).
"They've never asked to sit down and go through it. Our position is that our doors are open," he said.
Meredith also raised concerns about the governance, writing the board that runs the plan relies too heavily on employer representation and needs to have that representation.
"The working and retired members have little or no say in the operation of the plan," Meredith wrote in her submission.
Maley again said that has never been raised as an issue previously.
Meredith said with several amendments, the bill would be a step in the right direction.
Frame Lake MLA Wendy Bisaro, vice-chairwoman of the committee, said there was good feedback on the bill at the public meeting.
"I took away their points that they brought forward. It was good to hear from people," Bisaro said Monday.
She has been pushing for the bill for years to give the plan needs a legal operating framework, adding she doesn't believe NEBS is in any way being run incorrectly.
The bill has been sought for years said Maley.
NEBS assumed administration of the plan in 1999 and has been operating without a legal operating framework since then.
The law would provide legal certainty for the plan.
The pension fund was valued at $18 million when created. The latest audited financial report from this summer valued it at $128 million, with the value of the total investments increasing $22,318,000, or 22 per cent, in the last fiscal year.
That increase is why the pension fund is back in a surplus position, a report to its members states.
The fund had a surplus for 2013 of $8,557,000.
There were 200 teachers of Yellowknife Education District No. 1 who joined recently, increasing total membership in the plan by 10 per cent.
Bisaro said she has concerns about some of the clauses in the bill and the lack of definition on some aspects, such as what an ancillary benefit is.
Her sense is that the committee is open to recommending changes. The committee will do a clause by clause review of the bill this month and submit a report to the government by the end of October, though any changes it recommends would have to be accepted by the government.
