UPSE gearing up campaign to fight proposed public sector pension changes

Finance Minister Wes Sheridan accuses union head of fear mongering

Nancy MacPhee nmacphee@journalpioneer.com
Published on October 28, 2013

UPSE president Debbie Bovyer details the provincial government’s proposed changes to the public sector pension plan during an information meeting in October at Credit Union Place in Summerside.

Nancy MacPhee/Journal Pioneer

SUMMERSIDE — The Union of Public Sector Employees (UPSE) is gearing up for a fight against proposed changes to the public sector pension plan by the provincial government, changes, its president says will only hurt the Island’s economy.

Debbie Bovyer spoke about the pension changes proposed by the province and an alternative plan that union presented to government during a meeting of UPSE members Monday night at Summerside’s Credit Union Place.

The meeting is beginning of a campaign by what is the largest public-sector union in the province, which represents more than 5,000 employees.  

The biggest issue the union has with the proposed plan is what Boyver called “overfunding” of the plan.

“They want, today, 22 per cent more than what’s needed to pay the bills. Their explanation for that is to ensure they can pay retirees into the future,” she said following the meeting.

She questioned the motives behind the move, telling the 50 people in attendance that the increase could be used to balance the province’s budget, something Finance Minister Wes Sheridan, who was not in attendance, flat out denied.

“It is a complete and separate entity. We can’t touch the pension,” said Sheridan, when contacted by telephone afterwards. “We can’t go near that 122 per cent. That money is going to be set in legislation to be used for indexing only. They know that. She knows it. It’s all just politics and it has nothing to do with our budget.

“She knows full well what that 122 per cent is for — it is to give them a running start to continue to get indexing.”

Those in attendance were asked to sign a letter opposing the changes, which will be forwarded to their respective MLA, Premier Robert Ghiz and to leaders of the New Democratic Party and the Progressive Conservative Party.

To date, said Bovyer, almost 1,000 of the signed letters have been returned to her office and even more are being circulated to the union’s membership.

It was earlier this month that Sheridan announced sweeping changes to the public sector pension plan aimed, he said, at offsetting increasing costs.

Under the changes retiree pensions would not be reduced from current levels but, beginning in 2017, annual cost-of-living adjustments would be contingent on the fund’s ability to pay.

Also, any pension benefit earned by current employees as of Dec. 31, 2013, would not be reduced under the new plan but, beginning in 2014, pensions would be calculated using an average of indexed annual earnings as opposed to averaging an employee’s three best salary years worked.

“Now, they take your best three years of employment and they average that out and you get two per cent of your average for your pension,” Bovyer said of the current plan. “They are going to take the average industrial wage, which is an average of all the wages across P.E.I. for a certain year… and they will average that out and index your salary at that per cent. It will not be guaranteed as in the previous plan. You lose that guaranteed income.”

Government is also proposing a change in the age employees can draw a non-reduced pension, which will take effect in 2019.

Bovyer said there are several reasons why Sheridan’s plan won’t work, adding the changes will result in retirees spending less, which, in turn, impacts the economy and affects all Islanders.

“People will get less money in their retirement,” she told media. “They become more dependent on social programs and there is less money in the communities.”

Boyver added that the proposed changes would make it increasingly difficult for future public-sector retirees to make ends meet, something reiterated by several in attendance, including one retiree who said he has to supplement his $1,000-a-month pension with a part-time job driving a bus.

But Sheridan accused Boyver of using scare tactics, adding retirees know what there monthly benefit will be and plan accordingly, adding, under his plan, that there are “no cuts.”

“Every year the actuary will be looked at. They will never get less than the previous year. That is just a fabrication. They’re getting everything they were expecting. There is not going to be any change,” he added. “Eight of 10 years they are going to receive indexing. There is a very high probability of receiving indexing every year, as long as the bottom doesn’t fall out of the economy.”

He said Boyver is “fear mongering by telling people they will be much worse off.”

Sheridan said that ongoing consultations between management and employees have lessened the anxiety level he said that UPSE had been creating.

“All the scare tactics they were using are no longer working,” said the Finance minister. “It is very irresponsible of her to do that with her membership. It’s unfortunate. It’s unfair to the members.”

But the members at Monday’s meeting clearly had questions, stretching the meeting, which began with a half-hour presentation by Boyer on Sheridan’s plan and an alternative plan proposed by UPSE, to an hour and a half.

In UPSE’s plan, the method of pension calculation would be an average of the five best salary years worked and pension eligibility, beginning in 2019, would be delayed by two years, with eligible employees required to have 32 years of service or be 62 years of age. There would be pension inflation protection with guaranteed indexing of at least 60 per cent.

One of the key items proposed by the union was joint governance by participating unions and government of the plan, something, Boyver said, was flatly denied.

It’s something, she said, that would give the unions more control of what was being done with their pension dollars.

“They do govern a lot of it already. We have a committee that’s put together to decide on what the investments are. They are all part of that master trust. Everybody sits on that and decides how we are going to invest,” said Sheridan. “But joint trusteeship, what’s so important about that is, that means they take over 50 per cent of the liability… 50 per cent of the risk and they lose 50 per cent of the indexing guarantee.”

It’s something the Finance minister believes is unfair to members and he something he said the other unions don’t want.

“In this kind of situation, when it is in such bad shape, it is a terrible place to be. That’s why the other member will not have anything to do with it,” he said. “They want nothing to do with joint trusteeship until it is in good shape.”

The pension plan, as it stands today, has $2 billion in assets but, added Sheridan, it also has $2.4 billion in liabilities, which, he added, is “why we have to fix it.”

That’s why the other unions — the P.E.I. Teachers’ Union, the P.E.I. Nurses Union, the International Union of Operating Engineers, which has come out in support of the plan, and, to some extent CUPE, who Sheridan says are “still on the fence” regarding his new plan— are currently sitting around the table to work, he added.

“The unions that are still around the table are helping us write the legislation and everybody that is still negotiating is working at things that can be changed in small tweaks and ensuring that the legislation is the way they want it written,” said Sheridan. “There is no one that would want to change this if they didn’t have to but everyone, after 16 months of consultation and sharing of information, realizes that we have to do this to keep these plans table. That is the biggest piece of this.

“Everyone should have a right to a pension and the only way to keep this one strong and sustainable is to change the liability that is associated with it.”

UPSE plans to continue to fight against Sheridan’s plan, with a rally planned at Province House on Nov. 15.

Members and supporters in general are asked to gather at the Delta at 4:30 p.m. and march to the provincial legislature.

She said the other unions, along with the leaders of the three provincial parties, including the premier, will be asked to participate in the rally.

Boyver wanted to make it clear during Monday’s information meeting that the union is not fighting with the Liberals but with its employer, the current government, adding that if the same changes were introduced by the Progressive Conservatives or NDP the union would still be opposed.

“Government is working at putting people back in poverty,” she told members. “Our pension is not gold plated.”

 

nmacphee@journalpioneer.com