Finance

Public Service Pension Plan Reform: Forging Ahead for a Sustainable Future

On December 11, 2014, the Provincial Government announced next steps in Public Service Pension Plan Reform through the introduction of two Bills into the House of Assembly, An Act to Amend the Pensions Funding Act and the Public Service Pensions Act, 1991 and An Act to Modify Eligibility for Other Post-Employment Benefits. In accordance with the agreement signed on September 2, 2014 with the five largest unions (AAHP, CUPE, IBEW, NAPE and NLNU) representing employees of the Public Service Pension Plan, plan changes came into effect on January 1, 2015. As of that date, contribution rates and group health and group life insurance benefits, also known as Other Post-Employment Benefits, were adjusted accordingly.

Subsequent to the Public Service Pension Plan Reform Agreement, a Joint Sponsorship Agreement has been signed between the Government of Newfoundland and Labrador and the five major unions representing unionized members of the Public Service Pension Plan. The purpose of this agreement is to establish the principles of the Joint Trusteeship as provided for in the September 2, 2014 Reform Agreement.

In undertaking PSPP Reform, the Provincial Government had three objectives:

  • To have a sustainable defined-benefit pension plan;
  • To allow for a reasonable retirement income for public service employees; and,
  • To reduce the financial impact on the taxpayers of the province by putting the plan on track to be fully funded within 30 years.

Highlights of the new agreement include:

  • Maintaining a defined benefit plan;
  • The Provincial Government and plan members now share equally in the future responsibility of the PSPP;
  • Five year transition period is in effect for changes to early retirement benefits;
  • Future service benefits based on the best average six years instead of the current five years. Employees can have past service calculated at the higher of the best average six years of earnings or frozen best five years of earnings. Indexing is also frozen on past service. Indexing on future service is suspended.
  • Employee contribution rate increases of 2.15 per cent on earnings up to the Year’s Maximum Pension Earnings (YMPE) and 3.25 per cent on earnings above the YMPE; and,
  • Changes came into effect January 1, 2015.

PSPP Reform Agreement (503 KB)

As a result of PSPP Reform, the administration of the PSPP has been transitioned to Provident10 external link icon, effective April 1, 2017. All inquiries regarding the PSPP should be directed to Provident10 external link icon.

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