NEWS RELEASE – January 14, 2015
FOR IMMEDIATE RELEASE
Town of Happy Valley-Goose Bay
Sustainable Pensions for Employees the Key Topic
On January 13, 2015, the Town of Happy Valley-Goose Bay issued a lockout of CUPE Local 2019. Previous to that, the Union membership had provided a strong mandate to strike. The Town felt that there was little option but to proceed with a lockout of the union employees. The main unresolved issue continues to be the long term cost to taxpayers of funding the Defined Benefit Pension Plan.
Currently, employees are enrolled in a Defined Benefit Pension Plan. There are two components required by the pension regulators to a defined benefit pension plan; the “going concern” portion and the “solvency” component. There remains a significant deficit in the “solvency component” of $961,000 for which the Town is responsible. This is after the Town has already paid a combined $2.7 million into both the “solvency” and “going concern” components since the plan began in 1985. The plan’s worth is $7.8 million.
The Town has offered a guarantee to keep all current employees in the Defined Benefit Plan. But to ensure long term sustainability for Town taxpayers, all new employees hired in the future would be enrolled in a Defined Contribution Plan. A defined contribution plan would be funded through 50/50 contributions of the Town and the new employee. There would be no solvency issues under a Defined Contribution Plan. It should be noted that the City of St. John’s and their CUPE Local employees recently achieved a collective agreement guaranteeing to keep their current employees in a Defined Benefit Plan and enrolling new hires into a Defined Contribution Plan. This is the model the Town is pursuing.
“The Town supports the principle that all employees should receive a secure pension. The Town also is responsible to provide the services the community needs and expects. We must make sure that taxpayers can afford to fund a pension plan well into the future. We need to find a way to achieve these objectives.” stated Mayor Jamie Snook. “The Town encourages the Union to return to the negotiation table to resolve these issues.”