P.E.I. public pension fight could be heading to court

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The P.E.I. Union of Public Sector Employees wants to move ahead with a legal challenge of the province’s pension reforms.

Union of Public Sector Employees Debbie Bovyer speaks to a crowd assembled on the grounds of Province House Friday about 5 p.m. The protest rally was aimed at proposed changes to civil servants' pensions.

Union president Debbie Bovyer says the union’s legal team believes they may have a valid argument against the P.E.I. government’s pension changes.

“The advice that we’re getting is that we potentially have rights here to file a lawsuit,” Bovyer said Monday.

“If at all possible, we will be moving forward.”

Bovyer says it was a new provision that gives the province immunity from any future legal action over its pension reforms contained within the legislation tabled last week that has led her to believe a legal challenge is warranted.

“That is the tipping point for me. That’s underhanded,” she said.

“I don’t like when people take other people’s rights away. It’s just being bullies. It’s terrible what they’re doing.”

Last week, the province tabled legislation that will enshrine into law its plans to reform to public sector pensions changes that include the elimination of guaranteed indexing and moving to a career average for calculation of pension benefits.

One new provision in the act protects government from liability a move that could block any future legal challenges or grievances.

“I believe it’s taking away the democratic process,” Bovyer said.

“I’m quite fascinated that a provincial government would try to legislate rights away from Islanders that they’re elected to represent.”

UPSE filed a grievance against the government three weeks ago, saying the changes to pensions violate the union’s collective agreement with the province.

The union is concerned new immunity provision would not only eliminate future grievances, but could also kill the current one.

Both UPSE and the Canadian Union of Public Employees (CUPE) have been fighting the changes a fight that has included ad campaigns and a protest that saw over 400 people calling for government to go back to the negotiating table.

CUPE national representative Bill McKinnon said the immunity provision in the legislation is concerning.

CUPE is also obtaining a legal opinion.

“The question we have is, if you have liability concerns about your new plan, if you didn’t you wouldn’t need this immunity legislation,” McKinnon said.

“That’s going to be part of our discussions with our legal folks, to see if that’s appropriate.”

McKinnon and other CUPE representatives held a meeting with Finance Minister Wes Sheridan Monday to outline their key concerns over the pension reforms.

CUPE and UPSE would like to have joint trusteeship of the pension fund, but although Sheridan has indicated he is open to this down the road, if changes go ahead as planned, there is very little role for the union to play in managing the fund, McKinnon said.

“Our concern about joint trusteeship under their model is all the triggers are already in place and we’re really just limited in governance.”

Mark Janson, another CUPE national representative who has been working with the union on pension reform in other provinces, attended the meeting Monday. He said he is concerned over Sheridan’s proposed changes because Sheridan is trying a new funding model one that over-funds the pension plan to 122 per cent.

The finance minister says this builds a financial cushion that would pay for any losses in the fund.

Janson says this is a model that has never been tested.

“It’s a new way of providing security, it’s untested in Canada, we have reason to be suspicious of it, whereas on the other hand we have this jointly sponsored model that’s worked very, very well throughout the (economic) crisis.”

Sheridan understands the unions’ concerns, but he feels his reforms better meet his responsibility to protect civil servants pensions while also being prudent with taxpayer’s dollars.

As for the concerns over his immunity provision, Sheridan says it will protect not only government, but also union representatives that sit on advisory committees that oversee the pension plan as well as the plan itself.

“We need to protect our membership and we need to protect the plan,” Sheridan said.

“The plan covers all of these costs and we need those dollars in that plan to make sure that we’re paying out pensions.”

Organizations: Canadian Union of Public Employees

Geographic location: P.E.I., Canada

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  • Juanita Bonita
    December 03, 2013 - 07:14

    The cost of pensions is very affordable. It is the cost of having 100% funding in order to pay for the pensions that is causing the problem. The notion of providing 100% funding to pay pensions was nice in theory when average investment returns were much higher than they are now. This theory breaks down when investment returns are very low. In today's low interest environment, any shortfall in pension payments (pension payments less investment income) should be paid from the operating budget. This amount is far less than the "funding" shortfalls created by lowing the assumed long term return on pension funds. So yes, the provincial government should be taken to task for any unwarranted changes to the pension plan.