NEW - Pension Reform: Forging Ahead for a Sustainable Future

On December 11, 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 will come 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, will be 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 will share equally in the future responsibility of the PSPP;
  • Five year transition period will be 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 will also be frozen on past service. Indexing on future service will be 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 will come into effect January 1, 2015.

PSPP Reform Agreement (503 KB)

Public Service Pension Plan - PSPP

The Public Service Pension Plan (PSPP) was established on April 1, 1967 by the Public Service Pensions Act. The PSPP is one of four Defined Benefit Pension Plans administered by Government. Under Defined Benefit Plans, pensions are calculated based on a percentage of members years of pensionable service and pensionable earnings.

Overall administration of the PSPP is the responsibility of Provident10 External Link Icon, in cooperation with the employers who participate in the plan.  As of December 2016, there were approximately 28,400 members in the PSPP, including employees of Crown Corporations, Healthcare Organizations, School Boards and a variety of other organizations owned or controlled by Government.  There were approximately 19,100 pensioners.  The primary objective of the PSPP is to help plan members prepare for a comfortable retirement.

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