2012-11-29_Minutes--Procès-verbalCommittee of the Whole Open Session
November 29, 2012
Minutes of the Portion of the Committee of the Whole Meeting Open to the Public
Monday, November 29th, 2012, 7:00 p.m.
8th Floor Boardroom, City Hall
Present: Mayor Mel Norton
Councillors Farren, Fullerton, MacKenzie, McAlary, Merrithew, Norton, Snook and
Strowbridge
- and —
P. Woods, City Manager; J. Nugent, City Solicitor; G. Yeomans, Commissioner of
Finance and Administrative Services / Treasurer; E. Gormley, Common Clerk and J.
Taylor, Assistant Common Clerk.
Also present: Susan Rowland, Chair of the Provincial Pension Reform Task Force; Jana Steele,
Goodman's Law Firm and Mr. Roland Yves.
1. Meeting Called To Order
The Mayor called the Committee of the Whole meeting to order.
2. Discussion of Confidential Matters
On motion of Councillor McAlary
Seconded by Councillor Merrithew
RESOLVED that the public be excluded from the meeting for the duration
of the discussion on the following matters: 8.1 Financial Matter 10.2(4)(c).
Councillor Snook stated that he believed the subject of the financial matter, being a presentation
from the New Brunswick Pension Task Force to Common Council, should remain in open
session of Committee of the Whole.
Councillor McAlary and Councillor Merrithew agreed to withdraw their motion.
8. Supplemental to Agenda
8.1 City of Saint John Pension Plan — Presentation from the NB Pension Task Force to
Common Council
Susan Rowland from the New Brunswick Pension Task Force advised that she was there to
answer any questions that members of Council might have about the recommendations she
gave in open session of Council on November 26th, 2012.
She reiterated that there were three choices, namely to continue on the same path which would
cost 26 million dollars per year; freeze the plan and switch to a defined contribution plan which
would cost between 25 and 78 million dollars per year; or switch to a shared risk plan which is
Committee of the Whole Open Session
November 29, 2012
16.4 million dollars per year composed of 12 million dollars to pay down the debt and four
million in current service costs.
Responding to a question Ms. Rowland stated that the calculations of the task force have been
based on the current cash flow including payroll calculations adding that the City could still
choose to layoff some employees. She advised that if the City considered laying off such a
volume of employees that it would affect the stability of the plan according to the actuary, then
the City would need to work with the Superintendent of Pensions to establish how it could be
done while maintaining the stability of the pension plan.
Responding to a question Ms. Rowland confirmed that the union groups are required to sign the
memorandum of understanding but that the retirees do not.
Regarding to a question Mr. Rowland emphasized that the payment required by the City is fixed
at 16.4 million dollars per year adding that there is a derisking strategy as well as an option to
add up to 2.75 percent of payroll if required or pay up to 2.75 percent less of payroll, excluding
overtime, if the plan is flush with money.
Mr. Woods stated that the shared risk plan caps the City's potential exposure to liability at 2.75
percent of payroll above the normal annual payment and that the employees would share in any
risks or benefits.
Responding to a question Ms. Rowland stated that once a surplus position is obtained and
indexing reinstated, the remainder of surplus funds would be used to improve benefits to
employees to the extent allowed by the Income Tax Act, and to set up a reserve fund.
Responding to a question Ms. Rowland assured that there was no need for a second opinion
regarding accepting the shared risk plan explaining that the task force has had a strong team
putting it together.
Regarding the disability provision that was originally in the pension plan, Ms. Rowland stated
that the new plan does not have a provision to cover disability. Responding to a question she
stated that the unions were in discussions with the Mayor and staff regarding finding a
replacement provider for disability coverage.
Mr. Yeomans advised that under the current system disability payments are taxable whereas
under the new system there will be a premium associated with disability payments and it would
not be taxable. He added that the prospective carrier would need details of the persons on
disability and that Human Resources is in the process of preparing that data for the carrier and
unions and that it should be ready by December 7t", 2012.
Responding to a question Ms. Rowland confirmed that there is a plan in the future to have a
large municipal pension plan for the whole province similar to what is in place in Ontario and
British Columbia. She said she believed that if they were able to amalgamate plans with other
municipalities then the payments could possibly be reduced due to economies of scale. She
added that the direction she has been given by the Premier is to make all plans in the province
secure, sustainable and affordable.
Committee of the Whole Open Session
November 29, 2012
Responding to a question Ms. Rowland affirmed that the City would be paying a larger
percentage of the pension payment . She explained that City employees will be contributing
almost the entire amount towards their ongoing benefits while the City's contribution, while
larger, is going towards past debt which belongs to the City and not the employees.
Mayor Norton called a recess at 8:50 pm. and reconvened at 9:00 p.m.
Responding to a question Mr. Woods said that the next step is for Council to see the draft
memorandum of understanding in writing and if agreed upon would trigger drafting of more
detailed plan documents, trust agreements, funding policies and other required documents.
Mayor Norton clarified that the resolution required of Council an intent to move toward a shared
risk model pension plan adding that there would be no point in preparing the contractual
language of a memorandum of understanding if Council does not approve going in that
direction.
Mr. Woods reiterated that the current system the City retains the risk, the proposed plan has a
shared risk component.
On motion of Councillor Reardon
Seconded by Deputy Mayor Rinehart
RESOLVED that the meeting be adjourned.
Question being taken, the motion was carried.
Common Clerk