Staff
The Government of Newfoundland and Labrador has agreed to contribute more than $1.8 billion in the form of a promissory note to the Teachers’ Pension Plan to ensure its sustainability.
The deal between the province and the Newfoundland and Labrador Teachers’ Association (NLTA) was announced on Tuesday.
Read: N.L. government, unions reach deal on pension reform
The agreement includes the following:
- the provincial government has agreed to take responsibility for all of the existing retiree liability and 50% of the active member liability, with special annual payments of $135 million starting Aug. 31, 2016;
- the Teachers’ Pension Plan active members will take responsibility for the remaining 50% active member liability through changes to the pension calculation formula, using the average of the best eight years salary instead of the average of the best five years for service after Sept. 1, 2015, and the suspension of indexing for future service;
- future actuarial surpluses and deficits will be shared equally;
- the plan will be jointly sponsored and managed by a board of directors as trustee, made up of representatives of the provincial government and NLTA;
- to assist in achieving the 100% funded target, members’ contributions will increase 2%, starting Sept. 1, 2015 and will be matched by the provincial government; and
- teachers who terminate after Aug. 31, 2016 with less than 24.5 years of service and who choose to take a deferred pension will have to wait until age 62 to access that pension.
“The joint trusteeship required a considerable investment by both sides,” says James Dinn, president of the NLTA. “In addition to the provincial government’s substantial contribution, teachers have agreed to pay increased premiums and reduce future pension benefits to ensure the long-term sustainability of the plan.”
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