Our Pension Our Future

COUNTING ON RETIREMENT SECURITY Nurses' need for greater control over decisions about their pensions and their futures is driving the work of the NBA Pension Review Committee.

Sorensen is not alone. Changes occurring within public sector pension plans could also affect the majority of BC's nurses who are members of the Municipal Pension Plan (MPP), and speak to the need for nurses to have more control over the governance of their pension plan in order to protect them from the very reductions in benefits that most PSPP members will suffer.

The MPP is one of four major defined benefit plans that are governed by their own boards. The MPP is the largest and most diverse, with over 309,000 active, inactive and retired members in BC. Members come from a variety of sectors across the province, including health care, municipalities and school districts.

Nurses, unlike teachers and college instructors who have control over the governance of their own plans, are one group within this multi-sector plan that serves a range of workers and retirees with varying income levels and needs.

NBA negotiators felt this governance arrangement could put MPP nurses at risk and raised these concerns during provincial bargaining last year. "BCNU decided that we needed to have a review of the governance of nurses' pensions because we believe that nurses should have a meaningful say in any decisions that affect them," explains Sorensen.

"I couldn't believe it – there was no consultation and no warning."

 

- BCNU President  
  Christine Sorensen

Nurses' wariness over pension security under the current MPP governance structure is borne from recent experience.

The case of the NBA one-percent fund is a perfect example of how nurses' efforts to proactively manage and shape their pension plan design have been frustrated, and helps explain their desire for effective control over decisions about their money and their pensions.

In the spirit of prudent, long-term planning, during 2006 NBA contract negotiations BCNU was successful in negotiating this fund, which diverted one percent of the 2008 market adjustment wage increase to a fund designed to provide members with better inflation protection and post-retirement benefits – entitlements public pension plans aren't obligated to provide.

"At the time BCNU was looking at increased costs for retirees from a long-term view – we were thinking about all of our members, especially our younger nurses, and how they might be impacted by a reduction in inflation protection and the erosion of benefits," Sorensen says. "We wanted to provide our members with a more secure benefit into retirement."

Unfortunately, after negotiations, and in spite of the language that was bargained, the MPP Board rejected the money the fund would generate to ensure inflation protection for NBA members in the MPP.

Revenue from the one-percent fund was then used to fund the Retiree Benefit Fund (RBF) that was started in 2008 in response to Municipal and Public Service pension plan reductions to retiree benefit premium subsidies. The Retiree Benefit Program received its first funding in 2009 and has been reimbursing up to 50 percent of the Medical Service Plan premiums pension plan retirees have had to pay – premiums that the provincial government will fully eliminate next year.

Assets in the RBF could provide nurses with full inflation protection. Unfortunately, this is something MPP rules will not allow, even as the MPP board voted to cap members' inflation protection at 2.1 percent – below the rate of real inflation.

It's for reasons like these that NBA negotiators put pension plan governance on the bargaining table. 

There is no question that nurses should have control over decisions about their pensions and their future. The negotiated NBA Pension Review Committee is currently assessing several options that could better serve nurses' interests. It's an exploratory process that's ongoing. An actuarial analysis will inform any recommendations it makes, including the possible creation of a Nurses' Pension Plan that's co-governed by nurses and their employers. 

Any recommended changes to the status quo will be put to a vote open to all active and retired members. And regardless of any governance changes, nurses' defined benefit pension will continue to be administered by the BC Pension Corporation and investments managed by the BC Investment Management Corporation. Current retirees who are MPP members will also enjoy legal protections ensuring there are no changes to their pension as a result of this process.

UPDATE (October 2019)

NEXT STORY