Pensioners continue fight for indexing
On Sept. 13, the Pensioners Coalition launched its communications campaign taking public sector pensioners’ concerns directly to the people of Newfoundland and Labrador.
At this press conference, past president of the Newfoundland and Labrador Public Sector Pensioners’ Association, Robert Langdon, stated that “ the provincial government has broken its contract with pensioners by refusing to adjust pensions for inflation.”
In the Sept. 14 edition of The Telegram, Finance Minister Thomas Marshall dismissed pensioners’ concerns when he stated that “ pensioners never paid for an indexed pension when they were working, and so the money isn’t there now.”
As was expected, the minister continues to deliberately confuse the facts in an attempt to publicly justify the government’s steadfast refusal to remedy their mismanagement of OUR pension funds. This applies specifically to the following:
The Public Service (Pensions) Act, 1968 was initially deficient in that all pension contributions were paid into and mixed with other revenue in the province’s consolidated revenue fund. While we expected our pension deposits to be safeguarded, our pension funds instead paid for the development of our province.
In the beginning, the government did not match workers’ contributions. No investments were made and no pension fund was created. As a result, the pension fund that was finally established in 1981 was saddled with substantial liabilities and underfunding. These realities continue to haunt us and the government continues to use them as an excuse not to improve our present pensions.
Government failed to make the employer’s contributions to the pension plans for a three-year period from 1991 to 1994. This added to the pension fund’s liabilities.
It is true that, as a result of the Atlantic Accord, the government was able to apply over $3 billion to the pension plans. However, this was not enough to cover the losses due to the previous mismanagement and due to the failure to pay the employer’s share during the “contribution holiday” of the early 1990s.
Moreover, this deposit was designed to forestall the collapse of the pension plans which would have had a negative impact on the government’s fiscal reputation.
Despite Minister Marshall’s opinion that pensioners never paid for an indexed pension, the facts are to the contrary:
For a nine-year period, the government recognized that the contract with its workers included indexing and therefore until 1989 it regularly enacted legislation (Increase of Pensions Acts of 1980 to 1989) to compensate for the rise of inflation.
Unfortunately, since the unilateral discontinuation in 1989, pensioners have seen the value of their pensions diminish at a rate where they are now worth about 50 per cent of the value at the time of their retirement.
The government’s recognition that it owed its former workers indexing enhancements led to a partial cost of living index, introduced in 2002. However, this is capped at 1.2 per cent of the CPI making our pension plan the one with the worst indexing benefit in Canada.
In summary, the government did not live up to its legal, contractual, moral and ethical obligations.
The members of the Newfoundland and Labrador Public Sector Pensioners’ Association and our affiliated partners in the Coalition call upon the government to accept its responsibility to rectify the inequities that mark the present public sector pensions’ situation. These are due, not because the former workers did not pay for indexing, but rather, they are due because of past governmental mismanagement.
Sharron Callahan President of the Newfoundland and Labrador Public Sector Pensioners’