Canadian Labour Reporter

7 Canadian HR Reporter, a Thomson Reuters business 2014 CANADIAN LABOUR REPORTER the road, nobody would face the issue," Mar- shall said of the pension plan. "No one else had ever touched it and it was my feeling that no one would; that if we didn't do it now it would never get done." According to Carol Furlong, president of NAPE, Marshall was the only man for the job. "(The) government did not have to consult with us. They could simply have gone to the legislature unilaterally and arbitrarily imposed changes to the Public Service Pension Plan. We did not want them to impose those chang- es without an opportunity to have some input," Furlong said. "Tom Marshall is a very big man who is very soft-spoken. He's not a fighter and he's not a scrapper. People tend to like him. We were very clear that we wanted to play a role in this and we had meeting after meeting." Marshall's disposition made him an ideal collaborator, she said, when those meetings ran into the early morning hours for months on end. Finally, a deal was reached. Current retirees will not be affected by the deal and a five-year transition period will be implemented to allow for changes to early re- tirement. The final deal will see the government matching employee contributions and sign- ing a promissory note for $2.685 billion, am- ortized over the next 30 years. In return, the union agreed to plan changes — including a contribution rate increase beginning in Janu- ary 2015 — with a value of $1.128 billion. Additionally, pensions will be calculated based on an employee's best six years instead of their best five. And while pension indexing is frozen until the unfunded liability is elimi- nated, both Marshall and Furlong expressed optimism that the issue will be addressed again sooner rather than later. Increased contributions are not ideal, Fur- long said, but the unions were willing to make compromises to protect their defined benefit pension plan and to prevent a two-tier system. "We wanted to make sure we protected people to the best of our ability," Furlong said. "This is by far, without a doubt, the best change to a pension plan we have seen." The ability to continue to protect employ- ees — guaranteed by further commitment to collaboration — was equally important to both government and unions. The upcoming intro- duction of legislation to set up an arm's-length corporation for the pension fund assures unions and government will continue to work together to shape the future of the plan. The joint trusteeship agreement will see shortfalls shared at 50-50 between public servants and taxpayers. The government will appoint half the members of the new entity's board, and the unions will appoint the other half. The joint trusteeship will be independent from the provincial govern- ment and legislation will establish its frame- work, structure, appointment process and procedural rules. Government and unions will work together to establish the foregoing framework. The establishment of the joint trusteeship also means the government loses its ability to simply legislate changes to the plan without first consulting the unions. "It places us in a position where we have equal control over the pension plan," Furlong said. And while that also places the unions in a position of equal responsibility for any liability that should arise, the guarantee of control — especially when it comes to maintaining a de- fined benefit pension plan — is worth the risk. "This agreement will help to ensure the fu- ture health of the Public Service Pension Plan and the overall unfunded liability of all public sector pension plans which, when combined with other post-employment benefits, ac- counts for 74 per cent of the province's pro- jected net debt as of March 31, 2015," said Johnson. "This agreement on the future of the Public Service Pension Plan is an important step in addressing the liability of all public sec- tor pension plans." And indeed, there are four other pension funds the government still plans to restruc- ture accordingly. Moving forward, Marshall hopes the part- nership will lead not only to more effective management of the PSPP, but to a stronger relationship between government and union leaders. "There was a lot of blame going on," he said of the initial negotiations. "So I said, 'Let's for- get the blame. We know we've got a problem, the problem is ours. Let's just deal with it.' And we did. We got it done." news Photo: Mike Cassese (Reuters) Five public service unions, including the Newfoundland and Labrador Association of Public and Private Employees and the Newfoundland and Labrador Nurses' Union, collaborated with the pro- vincial government to reform the Public Service Pension Plan. Unions accept concessions to protect defined benefit pension < from pg. 1

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