Teachers to Vote on Revised Pension Plan Proposals

Nova Scotia teachers will choose between two revised proposals to strengthen their pension plan in a vote scheduled for early March, the Nova Scotia Teachers Union and the government of Nova Scotia announced today, Feb. 15.

The Nova Scotia teachers' pension partners board has developed two funding alternatives for the pension plan to address some concerns raised by teachers and school boards about proposed pension changes. Those changes were narrowly voted down by teachers on Feb. 1.

"Everyone understands that the teachers' pension plan must be properly funded," said Finance Minister Peter Christie. "Government and the teachers agreed in 1993 to share the challenge of a significant funding shortfall, and we continue to work jointly on a solution."

Proposal A has the same provisions as the Feb. 1 proposal, including a $142-million cash contribution from the province and variable indexing tied to the level of the plan's funding. However, the date by which teachers can retire under the current pension rules is extended to July 31, 2006, to alleviate concerns about teachers retiring part-way through the school year.

Proposal B allows for more predictable indexing provisions than Proposal A. Both teachers and government will increase their pension contributions by two per cent, effective Aug. 1, 2005, to pay for indexing at 50 per cent of CPI, regardless of the plan funding level. Proposal B also gives teachers the option to retire under the current plan rules until July 31, 2006.

"Teachers will be asked to choose from one of the two new proposals, as the status quo is not an option," said Mary Lou Donnelly," president of the Nova Scotia Teachers Union. "The longer the pension plan remains underfunded, the harder it will be to make up the shortfall. We feel strongly that we needed to revisit this issue right away."

Government and the Nova Scotia Teachers Union agreed to meet various targets for the pension plan when it was restructured in 1993. Although the funding level had reached 81 per cent by 2003, the large number of retiring teachers and other factors were expected to cause the level to decline to less than 60 per cent by 2033, and even more rapidly after that.

The plan changes and the additional funding -- in either proposal A or B -- would preserve the long-term health of the plan for teachers and stabilize pension costs for tax payers. Both proposals require the government to add about $142 million to the plan to match the value of the indexing given up by teachers.

Changes to plan governance are also recommended in each case. Instead of the minister of finance as the plan's sole trustee, responsibility would shift to a new board of trustees on April 1, 2006.

As per the previous proposal, the pension plan changes would not affect retired teachers who are currently receiving pensions. Teachers who retire before July 31, 2006, may choose to have their pensions paid under existing rules or the new rules.

Teachers will cast their votes on Wednesday, March 9, with an advance poll to take place on Tuesday, March 8.