Debbie Bovyer, president of the Union of Public Sector Employees (UPSE)
Prince Edward Island’s biggest public sector union is launching a campaign to fight changes to the province’s pension plan – reforms the union claims will result in major cuts to pension benefits.
The province says the changes are not drastic and are necessary in order to curb hundreds of millions in pension shortfalls that could to cripple the province’s economy.
Debbie Boyver, president of the Union of Public Sector Employees (UPSE), says the province wants to eliminate increases made each year to pension payments that allow them to keep up with inflation, a practice known as indexing.
This and other measures proposed by government would supposedly eliminate the approximately $230 million deficit within the two provincial pension funds and bring the plan to a surplus of over $100 million.
She points out the province is only legislated to keep the plan financed to 90 per cent of its total value.
“The changes are overdramatic,” Boyver said.
“Its produces an overfunding amount of 133 per cent, and it just doesn’t provide a sustainable living for people when they retire."
For over a year, a working group made up of government and union representatives has been working on a plan to reform P.E.I.’s current public service pension plan.
Now that eliminating indexing is part of government’s proposal, the union is launching a campaign this weekend to oppose it, with meetings scheduled across the Island to raise concern about how eliminating indexing would cut pension benefits.
Boyver said when government learned of their campaign, Finance Minister Wes Sheridan called a last-minute meeting of the working group in an attempt to get all the unions to agree to government’s reforms.
Then on Thursday, the province called a news conference. Premier Robert Ghiz and Sheridan planned to announce the pension changes and wanted the unions to be onside.
UPSE refused to budge.
The news conference scheduled for Friday morning was cancelled as abruptly as it was announced.
Sheridan says UPSE’s concerns about the proposed reforms are unfounded and the campaign being launched is nothing but fear mongering.
“There’s no cut to pensions,” he said.
He is upset UPSE would wage a public battle after 16 months of negotiations between government and unions.
“We’ve seen in Detroit and all of these places go bankrupt due to pension plans, we’re seeing every province in Canada reacting to this,” Sheridan said.
He is worried the union’s campaign will cause a retirement panic, with people retiring early before the changes take effect.
“Nothing by retiring now when it’s not in your plan would ever benefit you. We want everyone to hear that loud and clear,” Sheridan said.
The finance minister admitted the government’s proposal does ‘look at’ indexing, but says this is a necessary change.
Boyver says UPSE believes government wants to stop indexing pension benefits as a way balance its budget.
The union submitted an alternative proposal, which it claims is more moderate and would ensure the plan is 100 per cent funded, rather than overfunded.
Sheridan flatly denied any implication the changes are being made to help his budget.
“The overfunding that will be in the plan is there as a reserve indexing fund,” Sheridan explained.
“It can’t be taken out, it doesn’t go on my bottom line. It is a complete and separate entity.”
As government and UPSE argue, a deadline looms.
Legislation to enact the pension reforms must be introduced when the house reopens next month. That’s because a national independent actuary firm will begin its analysis on the financial condition of the province’s pension plan this spring.
That’s why Sheridan says the changes he has proposed will go ahead, even if UPSE is not on board.
“We have to,” he said, adding he hopes the union will return to the table where all the province’s other unions are at this time.
“We cannot endure the amount of money that will come out of this (actuarial) evaluation.”
Opposition Steven Myers says Sheridan will have a major protest on his hands if he goes ahead with pension changes in defiance of the province’s largest union
“He’s going to have Great George Street full of people, telling him what they think about it,” Myers said.