MINUTES OF A SPECIAL MEETING OF FREDERICTON CITY COUNCIL
MONDAY, MARCH 18, 2013
Minutes of the Special Meeting of Fredericton City Council held on
Monday, March 18, 2013, at 5:30 p.m. in the Council Chamber, City
Hall, Fredericton.
Attendance
ATTENDANCE
Council:
Deputy Mayor Stephen Chase, Councillors Greg Ericson, Steven Hicks,
Dan Keenan, David Kelly, Scott McConaghy, Eric Megarity, Mike
O’Brien, and Kate Rogers.
Staff:
Murray Jamer, Assistant CAO/Director of Engineering & Operations
Brenda L. Knight, City Clerk/Manager of Legislated Services
Michelle Brzak, City Solicitor
Chantal Gauthier, Staff Solicitor
Ken Forrest, Director of Growth & Community Services
Jane Blakely, Director of Strategic Direction & Internal Consulting
Tina Tapley, Director of Finance & Administration/City Treasurer
Maurice Gallant, Director of Information, Improvement & Innovation
Paul Fleming, Acting Fire Chief
Brad Cameron, Assistant Director, Public Safety
David Seabrook, Assistant Director, Growth & Community Services
Brent Blackmore, Inspector
Wayne Knorr, Manager, Internal Communications
Karen Garrett, Recording Secretary
Absent:
Mayor Brad Woodside
Councillor Bruce Grandy
Councillor Leah Levac
Councillor Marilyn Kerton
COUNCILLOR
INTEREST
MARILYN
KERTON
–
CONFLICT
OF Councillor Marilyn Kerton –
Conflict of Interest
Due to a Conflict of Interest, Councillor Marilyn Kerton had previously
advised the City Clerk that she would not be in attendance.
PURPOSE OF SPECIAL MEETING
The City Clerk read the purpose of the meeting as follows:
Purpose of Special Meeting
Special City Council Meeting – March 18, 2013
page 2
“By order of His Worship Deputy Mayor Stephen Chase, and pursuant
to Section 12.03(1) of By-law No. A-2, A By-law Respecting
Administration and the City Council, a Special Meeting of Fredericton
City Council is scheduled for Monday, March 18, 2013, at 5:30 p.m. in
the Council Chamber, City Hall.
The purpose of the Special Meeting is for City Council to consider:
A recommendation from the Board of Administrators of the
Superannuation Plan for the Employees of the City of Fredericton with
respect to the conversion of the Superannuation Plan to a Shared Risk
Pension Plan.
The Memorandum of Understanding regarding the Superannuation
Plan for the Employees of the City of Fredericton with respect to the
conversion of the Superannuation Plan to a shared risk pension plan.”
Deputy Mayor Stephen Chase welcomed all those in attendance, and
paid special mention of the following Union representatives:




Wade Kierstead – CUPE Local 3864
Sandra Lint – CUPE Local 1783
Kevin Smallwood – CUPE Local 508
Julie Brown-Snook – CUPE Local 1709
Comments by Councillor Mike O’Brien – Chair of the Board of Comments by Councillor
Administrators for the Superannuation Plan for the Employees of Mike O’Brien
the City of Fredericton
“Good evening Council Colleagues, City Union Presidents, City Staff,
Ladies and Gentlemen.
Tonight, we gather at a special Council meeting for a significant event
related to the long-term stability of the pension plan for the City of
Fredericton. After four months of collaboration between City of
Fredericton union & management representatives, and members of the
New Brunswick Task Force on Protecting Pensions, we are being asked
to consider a Memorandum of Understanding related to a Shared Risk
Pension Plan for the City of Fredericton. This new plan would replace
the current Defined Benefit Pension plan.
Plan Deficit
Like defined pension plans everywhere, the City of Fredericton’s plan
was experiencing a significant deficit. As we learned from a valuation
of our pension plan as of June 30, 2012, the plan had a deficit of $59.3
million. This was in addition to the $37.4 million deficit in the plan
reported as of June 30, 2011, for which we took corrective actions.
Special City Council Meeting – March 18, 2013
To deal with the new deficit, we had until March 31, 2013, to submit a
solution to the New Brunswick Superintendent of Pensions. If there was
no plan, total contributions needed to rise by 7.7% of payroll – or $3.7
million – as of June 30, 2012. The 7.7% could come from increases to
employee/City payroll contributions and/or changes to future benefits.
And even after a solution was identified for the June 2012 deficit, under
the current Defined Benefit Pension Plan, all indications were that
there was a 50% chance that additional losses would be experienced to
the end of June 2013.
For many, this points to an obvious question – Why? Why are defined
benefit plans losing so much money?
The reality is that defined benefits plans, like the City of Fredericton’s,
have faced significant issues in recent years, including:
 low interest rates
 unstable financial markets
 unprecedented economic times, and
 changing demographics, which include:
o aging populations
o longer life expectancies, and
o the fact that pensions are being paid out over a longer
period of time.
The long-term sustainability of such plans is threatened.
Dealing with the Deficit
As a result of the deficit at the end of June 2012, the Board of
Administrators for the City of Fredericton Superannuation Fund
(“Superboard”) held a series of meetings to discuss solutions. Deficit
figures were presented to union/bargaining representatives and other
City staff on October 4, 2012.
The first step in dealing with the deficit was to develop guidelines to use
when considering a long-term solution to address the deficit.
Through a small group, consensus-building exercise, Superboard
members and observers agreed that any possible solution developed to
deal with the deficit must be:
 Secure
 Sustainable
 Affordable
 Equitable
 Stable, and
 Transparent
… to employees, pensioners and City taxpayers.
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Special City Council Meeting – March 18, 2013
That same month, a joint request was also made by all City union
presidents to the Superboard that the New Brunswick Task Force on
Protecting Pensions be invited to make a presentation to Board
members, City Council, unions, and non-bargaining representatives
about the Shared Risk Pension model.
After hearing the presentation, it was decided that the Task Force
would start meeting separately with union representatives and
management to develop a Shared Risk Pension plan for the unique
needs of the City of Fredericton.
Members collaborated over a four month period. Further review of the
City’s pension numbers was also carried out, which included the testing
of the plan against 2,000 different economic scenarios.
The Province of New Brunswick’s Shared Risk Model was developed
from the highly-regarded Dutch Pension system. The plan provides a
high degree of certainty that benefits will be paid when needed, based
on the assets of the plan. It provides a long-term solution to the Defined
Benefit Pension deficit problems.
I can’t even begin to imagine the meetings, and hours of work that went
into developing the Memorandum of Understanding that we have in
front of us tonight; thanks to the leadership demonstrated by our union
presidents, and their members.
I am happy to point out that we are joined here tonight by the CUPE
presidents:
 Kevin Smallwood, CUPE Local 508
 Julie Brown-Snook, CUPE Local 1709
 Sandra Lint, CUPE Local 1783
 Wade Kierstead, CUPE Local 3864
Key Aspects of the MOU
The Memorandum of Understanding that you have in front of you
tonight is very detailed, but before we vote on it, let me take a few
moments to highlight some key areas.
While some aspects of the Defined Benefit Plan remain in place for
current City employees, there are changes under the new Shared Risk
model that will affect pensioners, surviving spouses, and active
members.
Most notable is the change to Cost of Living Adjustments (COLA). Any
increase that was granted and started to be paid prior to the conversion
date, will be maintained. Future increases, however, will be subject to
the plan’s funding model, which states that such adjustments will only
be paid out when the plan is 5% or more above being fully funded. It is
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Special City Council Meeting – March 18, 2013
expected that over a 20-year period, such an increase will be paid out
at least 75% of the time, based on the Consumer Price Index (CPI).
City employees will pay 9% of pensionable earnings to the new plan,
while police officers and firefighters will pay 12% of pensionable
earnings for earlier retirement provisions. The City of Fredericton will
match these contributions, and will also pay an additional 2.5% of
pensionable earnings, for a minimum of 10 years and a maximum of 15
years, to deal with the deficit in the plan and other conditions.
For active members of the plan, other changes include:
 a reduction in the pension accrual rate for future service
 changes to post-retirement death benefits for future service
 changes to termination benefits
 changes to early retirement eligibility for future services
 contribution rates, and
 Maximum annual pensionable earnings.
Detailed information will be provided directly to employees about the
Shared Risk Plan. In addition, a series of information meetings will be
held in April.
The new Board will include an equal number of union and City Council
appointees. City Council appointees will include one non-bargaining
employee and one City of Fredericton pensioner.
Working from the Memorandum of Understanding signed by City
Council and the union representatives, the Shared Risk Plan will
establish a Funding Plan, Investment Policy, and Risk Management
Goals and Procedures that will comply with the Pension Benefits Act.
These documents will guide the work of the Board.
The new Shared Risk Pension Plan for the City of Fredericton also
includes staff at the Fredericton Area Pollution Control Commission
(FAPCC) and the Fredericton Region Solid Waste Commission
(FRSWC).
And finally, I would like, once again, to extend appreciation to our
union representatives, staff, and members of the provincial Task Force
on Protecting Pensions for their hard work on this file, and specifically
to Premier David Alward, for his foresight and leadership, which
resulted in the Shared Risk Pension Plan model for New Brunswick.
Mr. Chairman, we now turn our attention to the business of Council’s
consideration of the resolution concerning the MOU.
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Special City Council Meeting – March 18, 2013
CONVERSION TO A SHARED RISK PENSION PLAN
Moved by Councillor Mike O’Brien, seconded by Councillor Dan
Keenan THAT City Council adopt the following resolution:
WHEREAS the Superannuation Board (“Superboard”), at its
meeting of February 22, 2013, considered the financial state of the
current pension and its responsibilities as Administrator;
AND WHEREAS the Superboard considered the provisions of the
proposed Shared Risk Pension Plan developed with the assistance
of the Province of New Brunswick Pension Task Force;
AND WHEREAS the Superboard believes that the proposed
Shared Risk Plan meets its criteria for a solution to the current
plan’s financial issues, being Secure, Sustainable, Affordable,
Equitable, Stable and Transparent.
THEREFORE the Superboard recommends that City Council
should proceed with the conversion to a Shared Risk Pension for
the City of Fredericton
AND FURTHER that as part of the conversion process, By-law A-5
should be repealed and the Superboard thereby relieved of its
responsibilities as Administrator.
AND the Superboard recommends that City Council appoint one
(1) representative from the membership of the Fredericton
Superannuates Association, who is a pensioner, to the new Board of
Trustees for the City of Fredericton Shared Risk Plan.
NOW THEREFORE BE IT RESOLVED that the Council of The
City of Fredericton hereby receives and approves the
recommendations received from the Board of Administrators of the
Superannuation Plan for the Employees of the City of Fredericton,
with respect to the proposed conversion of the pension plan to a
Shared Risk Pension Plan;
BE IT FURTHER RESOLVED that the Council of The City of
Fredericton agrees to proceed with the conversion to a Shared Risk
Pension Plan for the City of Fredericton; and
BE IT FURTHER RESOLVED that the Council of The City of
Fredericton hereby authorizes and directs that an appropriate
By-law be prepared to repeal By-Law No. A-5, A By-law to
Continue the Superannuation Plan for the Employees of the City of
Fredericton, which upon its adoption shall relieve the Board of
Administrators of the Superannuation Plan for the Employees of
The City of Fredericton (“Superboard”) of its responsibilities as
Administrator; and
page 6
Conversion to a Shared Risk
Pension Plan
Special City Council Meeting – March 18, 2013
page 7
BE IT FURTHER RESOLVED that the Council of The City of
Fredericton is authorized to appoint one (1) representative from
the membership of the Fredericton Superannuates Association,
who is a pensioner of the City of Fredericton, to the new Board of
Trustees for the City of Fredericton Shared Risk Plan; and
BE IT FURTHER RESOLVED that the Mayor and City Clerk are
authorized to execute any necessary legal documents as required to
facilitate this resolution.
On the question, Councillors Scott McConaghy, Dan Keenan and Kate
Rogers acknowledged the dedication of those involved in the process of
reaching a consensus to proceed with the Shared Risk Pension Plan,
and were satisfied that it is a fair and equitable model for employees
and taxpayers alike.
The original motion was then put to the vote and declared
CARRIED UNANIMOUSLY.
Resolution to Approve the
Memorandum of
Understanding regarding
The Superannuation Plan for
the Employees of The City
Moved by Councillor Mike O’Brien, seconded by Councillor Dan of Fredericton
Keenan THAT City Council adopt the following resolution:
RESOLUTION TO APPROVE THE MEMORANDUM OF
UNDERSTANDING REGARDING THE SUPERANNUATION
PLAN FOR THE EMPLOYEES OF THE CITY OF
FREDERICTON
BE IT RESOLVED that the Council of the City of Fredericton
approves the Memorandum of Understanding among the
Fredericton Union of Civic Employees, Local 508, Canadian Union
of Public Employees (“CUPE 508”); Canadian Union of Public
Employees, Local Union No. 1709 (“CUPE 1709”); Canadian
Union of Public Employees, Local Union No. 1783 (“1783”);
Canadian Union of Public Employees, Local Union No. 3864
(“CUPE 3864”), and the City of Fredericton (the “Employer”) to
convert the Superannuation Plan for the Employees of the City of
Fredericton to a Shared Risk Plan in accordance with the terms of
the Memorandum of Understanding and the Pension Benefits Act
(New Brunswick); and
BE IT FURTHER RESOLVED that the Mayor and City Clerk are
authorized to sign on behalf of The City of Fredericton (the
“Employer”) the Memorandum of Understanding to convert the
Superannuation Plan for the Employees of the City of Fredericton
to a Shared Risk Pension Plan; and
BE IT FURTHER RESOLVED that the Council of the City of
Fredericton hereby directs that the Declaration of Trust, Plan text
and Funding Policy be prepared to implement the Memorandum of
Special City Council Meeting – March 18, 2013
page 8
Understanding, which documents shall be presented to City
Council of the City of Fredericton for its approval.
CARRIED UNANIMOUSLY
In closing, Councillor Mike O’Brien echoed the sentiments expressed
earlier by his Council colleagues, and noted that although four Unions
had agreed to sign the Memorandum of Understanding, all six unions
(including Police and Fire) had worked tirelessly in drawing up the
agreement.
Negotiations with Police (Union Local 911) and Fire (Union Local
1053) are ongoing.
COUNCILLORS EXCUSED
Councillors Excused
Moved by Councillor Eric Megarity, seconded by David Kelly
THAT Mayor Brad Woodside and Councillors Bruce Grandy,
Leah Levac, and Marilyn Kerton be excused from the meeting and
be relieved of the penalty as provided by By-law No. A-2, A By-law
Respecting Administration and the City Council. CARRIED
UNANIMOUSLY
ADJOURNMENT
Moved by Councillor Steven Hicks, seconded by Councillor Kate
Rogers THAT the meeting adjourn. CARRIED UNANIMOUSLY
The meeting adjourned at 6:25 p.m.
(Sgd.) Stephen Chase
__________________________
Stephen Chase,
Deputy Mayor
(Sgd.) Brenda L. Knight
_________________________
Brenda L. Knight,
City Clerk
Adjournment