Government employees are going to have to pay more to support the pensions of their retired colleagues.
The government is upping member contributions to the Public Service Superannuation Plan because it has a $1.65 billion unfunded liability.
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That’s $350 million more than just four months ago. Yesterday the government announced employees will have to increase their contributions by about 1 to 1.3 per cent, which the government will match.
For someone making $40,000 per year, that means an extra $400 in payments. Someone making $65,000 would pay an extra $700.
But that won’t be enough. More changes will have to come, according to Finance Minister Jamie Muir. They could include more payments or fewer benefits.
“The fund is in trouble. Pension plans right across the country are all down this year,” Muir said.
“What’s being done today is not sufficient to protect the integrity of the fund … this was seen to be a reasonable first step to try to solve the problem.”
Muir said his department and unions would be meeting to discuss other changes. But he said he didn’t know what they would be or whether they would take place this year or next.
The fund is currently only 64.8 per cent funded, down from 72 per cent in December. The crash of the stock market caused the pension to take a major hit.
There are about 14,000 retirees drawing from the pension fund, with about 16,000 employees paying into it.
“We should be doing more right away,” Muir said. “How far it needs to go will be a subject of discussion.”
Nova Scotia Government Employees Union president Joan Jessome responded by saying it was “very concerned about the government’s failure to develop a long-term strategy” for the pension. The union said the government had not been working with the union on a long-term approach, despite advance warning of the problems.