P.E.I. announces overhaul of pension plan

Teresa Wright
Send to a friend

Send this article to a friend.

Wes Sheridan, Minister of Finance, Energy, and Municipal Affairs, delivers the 2013/14 provincial budget in the Legislative Assembly as Carolyn Bertram, Speaker of the House, looks on.

The P.E.I. government will eliminate guaranteed cost of living increases as part of a major overhaul of its public sector pension plans.

Premier Robert Ghiz says the reforms are necessary to avoid hundreds of millions in pension liabilities that would have to be shouldered by taxpayers.

“Islanders are living longer and retiring sooner, and this means our pension plans are costing a great deal more than they have in the past,” Ghiz said during a news conference this afternoon.

The reforms look to address this. The biggest change is an elimination of guaranteed cost of living increases for pension payments, a practice known as indexing.

Cost of living increases, or indexing, will continue for the next three years, but beginning in 2017 will only be awarded if the pension plans perform well.

Finance Minister Wes Sheridan admits this does introduce a risk to future increases of pension benefits.

“We have to remove the (indexing) guarantee,” Sheridan said.

“It takes away the full risk that’s associated with the province today and change the way that we will approach it into the future.”

He pointed to an estimated $400 million liability projected for 2014 in the pension fund that would have to be paid out by the province if these changes are not made.

But finance experts in his department and with the actuarial firm Morneau and Shepell have determined pensioners will likely receive cost of living increases every four out of five years on average under the province's new plan.

In order to help ensure the plan does perform well, and thus pay out indexing to pensioners, the province has pledged an annual $25 million special payment into the pension fund for the next 20 years.

“We’re going to give these plans a running start to ensure they have a very high probability of paying out indexing,” Sheridan said.

Another change will see the age at which an unreduced pension is available raised from 60 to 62.

The way in which pension earnings are calculated will also change. Instead of using the ‘best three’ or the ‘best five’ years, after 2013 pension salary will be calculated by averaging all of an employee’s total earnings, indexed to reflect present day values.

Two of the province’s five unions, including the biggest civil service union in the province, are bristling over the reforms.

The Union of Public Sector Employees (UPSE) and the Canadian Union of Public Employees (CUPE) say they are not on side and are upset with the way government is pushing them ahead so quickly.

The two unions recently presented government with a counter proposal to reform the province’s pension plan.

“We recognize there is a serious problem with the pension fund,” said Bill MacKinnon of CUPE.

But the province's reforms will see the pension plan funded to 120 per cent, rather than the current legislated commitment of 90 per cent. This, along with a lowering of expected gains, is how the fund is expected to perform well and produce the necessary returns.

"We think this is too drastic, we think this is unnecessary to go this far and we’re going to tell our members that,” MacKinnon said.

UPSE likewise is not happy. It has scheduled a series of meetings across the province this week to present its concerns with the government’s plan to its members.

Ghiz said he knows some unions will be upset, but says he also hears regularly from Islanders outside the civil service who are upset over the hundreds of millions in tax dollars that have gone to cover pension losses.

“As premier it’s my job to do the best I can, and I think in this are here we’ve tried to find the best, balanced solution and like any decision we make, not everyone is going to agree.”

Ghiz added that he has sent a letter to the Indemnities and Allowances Commission, which dictates MLA salaries and benefits, requesting it to make the same adjustments to the MLA pension plan.


More to come, including reaction from UPSE and the Opposition. 

Organizations: Union of Public Sector Employees, Canadian Union of Public Employees, Indemnities and Allowances Commission

Geographic location: P.E.I.

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page



Recent comments

  • That Guy From PEI
    October 18, 2013 - 09:21

    Island teachers GIVE the government $40,000 to save for them at their retirement. The Government now wants to keep that. That is STEALING

  • On my own
    October 16, 2013 - 11:46

    As a taxpayer with no pension and the only money available for retirement being what I can put away myself this seems a little unfair. Whether the shortage is due to a downturn in the stock market, multiple governments taking funds, or simply not enough money going in is the plans problem. Why should tax payers have to come up with 400 million dollars to back up this fund. If that is the case where do I apply for money to top up my retirement fund due to the markets from 2008 to today. I live in the same 1% returns everyone else is in but no one around to make up the deficit I am looking at now and for my retirement. Don't get me wrong - I fully beleive that employees that are now retired or that were hired under the current funding and reimbursement system should see that honored by their employees. Maybe newly hired government workers and politicians should contribute to a retirement plan like everyone else - ?

    • Why?
      October 16, 2013 - 13:40

      Because if it is because Gov has not been paying it's share, and acting illegally and on breach of contract. If these people work for you, you are responsible.

    • Wait
      October 16, 2013 - 13:54

      It is not their fault that you are self-employed or elected to be employed by a company that does not provide a pension. This was agreed to by the employer as a way to not pay some groups (IT, Engineers, technologists, nurses etc..) wages competitive with private sector. In return for less pay now, they would get some guaranteed pay later. A deferred wage plan, if you will. If you want to get rid of the incentive, some skills profiles will have to start paying more to attract experienced skilled people to fill the jobs when they have private sector options. You can't have both, If these people leave, you will have the same issue you have with doctors for multiple job descriptions.

    • Townie
      October 16, 2013 - 14:07

      As a taxpayer how long have you been working continuously in one job year round for? These working taxpayers only get their full pension if they have worked and paid into the pension for 32 years and are at least 62 (used to be 30/60).

  • Fed up
    October 16, 2013 - 11:04

    We have these uneducated idiots...ones who can't manage the provincial budget...spend like drunken sailors...and now want to adjust a pension plan that will leave us out in the cold. THEY don't care. When...not if...they lose the next election, look at THEIR pensions!! It won't affect THEM...but they are sinking US and our Province as fast as they can! This is not a democratic province any more. It's a Ghiz/Sheridan/Currie controlled environment...not one of the three know what they are doing...they just keep making things worse by the day! Except for themselves, of course......

    October 16, 2013 - 09:09

    Tax payers should not be involved in this equation ,if you want a bigger pension you should pay more into the plan .We had a financial melt down suck it up like the rest of us had to .This applies to civil servants AND MLAs .I have to get along with less I can not afford to contribute more to your fancy pensions .

  • Will March
    October 16, 2013 - 08:53

    Well, well....it gives me great comfort to at least know one thing for sure, that any written agreement with this government is not worth the paper it's written on. Why even write anything down when it can be tosssed away with the flip of a hand at any moment. Appears that this is the legacy of the Liberal Government. I still cannot believe the out and out bare faced lie Sheridan made last Friday in the Guardian re there would be no changes to the pension plan. With his nose so long bet he can't get his car door shut anymore. Your gonna look cute in a convertable this coming January. Wonder what would happen if I didn't pay the the increase in my provincial property tax (by the way is for the most part tied to the CPI) ? Would you put my name in the paper Wes? Would you put my property up for tax sale Wes? What gives you the right to do this Wes? Is it the Real Proprty Tax Act? Is that written on a piece of paper? Then you can place that paper in a safe place just where your going to put the Collective Agreement. Maybe I sound angry that is because I am. I have lost all faith in this government. I am sick and tired of the lies and the constant lying. If Robert Vessey shows his face around here again...which by the way has been only been twice since twice elected ( he indicated that this would change, he would have a closer association with his constituents)...another one that lied to my face in my home, don't bother parking your feet on my stoop and try to slip a "sorry you were not home tag" on my door knob while your driver was revving up to race away.. I was here...sure fooled you. I will be protesting, you can count on that.

  • Hawkeye
    October 16, 2013 - 08:53

    Wonder if Robbie an Wesey and the gang are going to repay /rescind the the $11,0000.00 pension increase they gave themselves to the MLA plan in July 2007 ?? Can't wait until the next election !!!

  • Misinformation
    October 16, 2013 - 08:22

    There is a lot of fear mongering and misinformation circulating around out there. This is not 20 years ago - what worked then does not necessarily work today. UPSE is not doing their members any favours.

    • Townie
      October 16, 2013 - 13:48

      Which part are they fear mongering or providing misinformation. Only ones providing misinformation is the Liberals

  • dennis
    October 15, 2013 - 21:10

    this would be called rape of a pension plan if was not simply theft

  • don
    October 15, 2013 - 20:56

    does that cut include the liberal governments pension? another 7.5% stunt. i hope the voters that put them back in are happy now that they have there pensions they do not care about the lower class servants.

  • johnthames
    October 15, 2013 - 20:36

    UPSE just doesn't get it. This was the correct move, although I am disappointed the government has decided to place an additional $25M yearly into the pension fund, that is taxpayer money that could be spent much more productively. They should have made union members pay extra contributions for full top up, after all it is their pensions, not the taxpayers. UPSE should learn where wealth is generated, and where it is not.

    • Townie
      October 16, 2013 - 07:15

      Government workers take a cut in pay in comparison to equivalent positions in private sector. The pension was put in place to make up for the huge discrepancy in pay. Now we are just a bunch of underpaid suckers.

    • Bryan
      October 16, 2013 - 08:28

      Union members ARE paying extra contributions. http://www.gov.pe.ca/finance/index.php3?number=1048947&lang=E Read it before you make any more union bashing statements. None of the public sector employees works tax free - they are all taxpayers just like you! Instead of bashing your friends and neighbors, get your story straight first.

    • Gov ITGuy
      October 16, 2013 - 13:44

      The last labour market study says that I get paid more off island,. Working for the PEI government is only competitive if you are too lazy to move, or actually have civic pride to pay back to your community. If there is a pay cut, good luck replacing me with anyone with experience willing to move here.

    • Wait
      October 16, 2013 - 13:47

      I'll be laughing my a$$ off when all of you start paying double CPP and whining that it is unfair. My answer will be, trash the plan and make people live on their own savings. Funny how it is only other people's pensions that should be cut, and your own should be contribution free.

    • To GovITGuy
      October 16, 2013 - 14:04

      There are lots of qualified IT people on PEI who would love to make half what you likely do.

    • All Talk
      October 16, 2013 - 17:32

      Townie, government workers , underpaid? Get Real! Gov ITGuy....I think we can replace you easily I hear the guy who puts mints in the urinals is in line for your job

    • Townie
      October 16, 2013 - 19:16

      private sector IT jobs pay more on PEI than the Province pays their IT staff, by close to 20k in the difference.

  • 14000 strong
    October 15, 2013 - 20:14

    “Islanders are living longer and retiring sooner, and this means our pension plans are costing a great deal more than they have in the past,” only because you offer early retirement packages so you can put your party supporters to work so therefore YOU are the problem with our pension.. I think you should reform mla pensions as well, make it 4 terms for your pension just to be fair what do you say wes.. you think the 7.5 decrease was tough on the liberals you will be out of power for the next 20 years after this 1 wes you and ghiz make me and all 14,000 of my brothers and sisters sick and you and ghiz showed us all what you think of our unions... this WILL be the final nail in your coffin,, I know your party supporters that are furious over this move.. ghiz get your head checked!

  • sipowicz
    October 15, 2013 - 19:22

    This a problem right across the country. Looks like a proactive move to try and handle a situations that was created 70 years ago. MLA following the same plan cant see there is anything wrong with that. About time a government made plans to deal with the real issues to make our province a better place.

  • sipowicz
    October 15, 2013 - 19:19

    This a problem right across the country. Looks like a proactive move to try and handle a situations that was created 70 years ago. MLA following the same plan cant see there is anything wrong with that. About time a government made plans to deal with the real issues to make our province a better place.

  • Well Well Now
    October 15, 2013 - 19:08

    Mr. Redmond, assemble a group of respected, qualified people for the next election and we shall rejoice in the streets...upon your victory.

  • Now I Understand
    October 15, 2013 - 17:43

    “Islanders are living longer and retiring sooner, " Now I understand why this government is killing the healthcare system and closing hospitals. They are simply trying to "Naturally" kill everyone to save pension&.

    • Dick
      October 16, 2013 - 07:21


  • Townie
    October 15, 2013 - 17:42

    If you had kept funding your share and stopped taking out the surplus to put into general revenue we wouldn't be in this spot in the first place. Does the MLA pension fund getting the same drastic changes?

  • Bev
    October 15, 2013 - 17:34

    So how much are the MLA's pensions being reduced and of course we can expect they will also have to work the years we employees have had to in order to get the same pension benefits. Then and only then will there be some trust and fairness in pensions. No money for pension fairness and still giving huge, huge financial grants to off Island firms??????? What an insult!!!

    • Mike M.
      October 15, 2013 - 18:00

      Yes.....the money should be spent on you rather than being used to create jobs for people. The blasphemy of it all.

    • XComa
      October 16, 2013 - 06:32

      Yeah... Provincially MLAs, and Federally MPs, Senators should be required to work the same amount of time as the Citizens. Working 6+ years and taking a Full Pension of over $100,000 per Year is Not Cool... Yes, and enough with the Corporate Welfare..

    • Out of Touch
      October 16, 2013 - 09:34

      You didn't win the lottery, you were the winning applicant for a provincial government job. Do some reading on the percentage of private sector workers that are provided with a pension by their employers. I have a novel idea, how about the only money that is contributed to your pension comes out of your pocket? Does that seem so unreasonable? Just be happy you have it markedly better than the private sector and quiet down.

    • To Out Of Touch
      October 16, 2013 - 13:52

      The people who work for government do so at a reduced rate at which private sector pays for the same job. Pensions were put in place to make up for this. Example Programmer Analyst gets $100k per year average in the private sector (plus health/dental/life insurance and either stock options or pension plans) where the gov only pays 48-60k per year for the same level of education/experience. These workers were already being screwed over, now they are being raped.

    • To Out of touch
      October 16, 2013 - 14:14

      "Today, over 50 percent of Canadians have a retirement plan at work with CAPs providing over two-thirds of private sector workplace retirement plan coverage, as noted by Bob Baldwin in Canadian Public Policy in 2008). " Also, alot of companies that do not offer pension plans instead offer stock options. Plus government workers do contribute hundreds to thousands of dollars a pay cheque into their pension.

    • Out of Touch
      October 16, 2013 - 17:53

      According to study in 2011 by Ilana Boivie at the National Institute of Retirement Security, only 33% of private sector employees have a pension plan and that figure is falling. If you are actually trying to argue that public sector pensions are even in the same league as what private sector employees are being offered by their employers then you are too attached to the situation to look at it objectively.

  • Island Boy
    October 15, 2013 - 17:30

    Great, let us start by reducing MLA pensions to what they were before Joe Ghiz upped them by 50% and then closed the House for that session. We voters do have memories!

  • sentance
    October 15, 2013 - 17:17

    Seems a bit unclear what the definition of the plan performing well is, but we have a similar plan at UPEI where the criteria is the rate of return earned by the plan over the previous three years I believe, and it certainly hasn't delivered indexing 8 of the last ten years, or anything close to that.

  • george
    October 15, 2013 - 17:10

    don:t cut your pension take it from the poor you dummys