Government not transparent about pension risks being shifted to employees!
December 10, 2013
The President of the PEI Union of Public Sector Employees, Debbie Bovyer, says “with the passing of its new pension legislation government has largely shifted the risk from itself to the plan members, and hasn’t done a good job explaining this fact to their employees.”
“With the removal of guaranteed indexing government can’t say whether any level of indexing will be provided from year to year in the future. They are telling their employees that based on actuarial models they hope to award some level of indexing in four out of every five years, however, this is largely guesswork,” explains Bovyer.
She points to the Auditor General’s report which was recently released in New Brunswick. Boyver says that “according to the report risks are largely assumed by the employees under the Shared Risk Pension Plan model. PEI has modeled their pension changes after New Brunswick’s and so we are pretty much in the same boat.”
President Bovyer explains that “government is shirking its responsibility by telling its employees that their pension benefits are more secure with the changes. According to a Mercer report on Shared Risk Pension Plans, government bears a heavy responsibility to be upfront with its employees about the fact that risks exist and that the allocation of those risks has changed. The report also warns that predictions about future benefits should be viewed with ’healthy skepticism,’ as the models used to make the financial predictions are limited.”
“Lastly, government’s ’immunity clause’ in the pension legislation speaks volumes about their lack of faith in their own numbers. The clause is designed to protect government against any legal challenges that result from the changes they are making to benefits, contributions and funding. I think they are well aware that things may not turn out as well as they are saying, and so they want to make sure they are completely protected,” asserts Bovyer.
Please contact Mark Barrett at 892-5335 (or toll-free at 1-800- 897-8773) to arrange an interview.