Public service workers of New Brunswick agreed to a fair deal on compensation that included a reliable, safe, and cost-effective defined benefits pension plan. This was the deal, but then in 2014, the then government moved the goalposts - replacing your defined benefits pension plan with the not-so-shared risk pension plan. Since then, PIPSC and other public sector trade unions have been pushing back both in court and at consultation tables.
Background
Before 2014, New Brunswick’s public sector workers received a defined-benefit pension plan, which provided them with a guaranteed pension benefit based on the salary earned in their best five years of service. This defined benefit pension guarantee was set out in the Public Service Superannuation Act, RSNB 1973, c. P-26, and for decades, PIPSC and other public sector unions relied on this guaranteed benefit when negotiating total compensation.
In 2014, the New Brunswick government introduced legislation called An Act Respecting Public Service Pensions SNB 2014, c 44, to unilaterally override this guaranteed pension and replace it with a “shared risk” pension. “Shared risk” pensions are a model only used in New Brunswick, and try to provide a certain ‘target’ pension benefit. However, as compared with the defined benefit pensions that existed before:
- The “shared risk” pension plan puts all of the risk on employees instead of the employer and pension benefits can be reduced – or contributions increased – based on the funded status of the plan. The risk is “shared” among current and past employees, with the employer sharing almost none of the financial risk.
- The implementation of the “shared risk” plan made a number of negative changes to plan terms, including the use of career average salary instead of the best five years to calculate the benefit. This, along with the higher retirement age (65 vs 60) and the higher contribution rate has meant a significantly inferior pension plan.
- “Shared risk” plans in New Brunswick are managed very conservatively, further lowering the risk on the employer while increasing the cost to employees.
After the government unilaterally imposed these changes in 2014, without agreement or genuine consultation with PIPSC, PIPSC launched a constitutional challenge of the Government's imposition of the “shared risk” pension plan, arguing that the unilateral changes violated 2(d) of the Charter of Rights and Freedoms, which protects the right of members to form unions and protects against substantial interference in the collective bargaining process. PIPSC’s challenge also argues that the prohibition on collective bargaining over pensions – which allowed for this unilateral change – was unconstitutional.
Employer counsel has drawn out this legal process and rebuked efforts to come to a mutually agreeable settlement. It has engaged in drawn out examinations and has buried the unions challenging the law in waves of documentary disclosure, which it has continued to send eight years after the challenge started. Most recently in the autumn of 2024, the government made significant changes to its pleadings, which are intended to set out the basis for its defence at the beginning of a court case.
Nevertheless, PIPSC and its partners have been able to move the litigation forward, finishing all documentary disclosure and examinations and serving two expert reports on the Province in support of our case. We are hopeful that this progress will lead to a positive resolution for PIPSC members, whether through discussions with the Province or in Court.
Going Forward
As part of our longstanding legal strategy, PIPSC has worked with its partners from other unions to advance evidence-based arguments that demonstrate this plan is financially inferior and carries more risk for members. Two experts have been retained by PIPSC to speak to the impact of these plan changes. This complements the range of evidence that the government has infringed on your legal rights and on the collective bargaining process when they imposed this new plan without real consultation.
We are equally hopeful that the change in government presents new opportunities to resolve this issue through a negotiated settlement. While former Premier Higgs was an architect and cheerleader for shared risk plans, Premier Holt has been vocal in her concerns with the acrimonious relationship her predecessor had with the public service and the manner in which the shared risk plan was introduced.
In the interim, however, we continue to press forward with our litigation. In December 2024, a Case management conference was held between the parties and the Chief Justice. We are now in the process of revising our pleadings in response to the government's recent change to its submissions. We are not yet able to anticipate a trial date; however, we expect the Chief Justice to establish a deadline for expert reports in the coming few weeks. At that point, we will be better placed to know the timelines for the trial.
Additional information on our progress to resolve this issue will be posted to the PIPSC website as soon as we are able to disclose this information