UP! How the NL government and its unions solved their pension problem

| October 16, 2014
image: rabble.ca

In a country characterized by increasingly confrontational labour relations, an unlikely story of cooperation and negotiation emerges. Are there lessons for the rest of the country?

It took two years of wrangling -- and over a decade to get to the wrangling stage -- but on September 2, 2014, the government of Newfoundland and Labrador announced that it had reached an agreement on pension reform with five of its employees' labour unions.

In an era of increasingly hostile labour relations, the NL government and its unions managed to negotiate an agreement. Unions now have equal say in the new corporation that is to be established to administer the revised plan.

Factors for success

NAPE, CUPE, NL Nurses' Union, Association of Allied Health Professionals and IBEW knew that the province's Progressive Conservative premier was an avowed supporter of defined benefit pension plans. This was a critical factor for success. Defined benefits plans usually help guarantee a decent quality of life by guaranteeing the benefits that employees can access in retirement, allowing for greater security. 

Increasingly, employers are either eliminating workplace pension plans outright, sometimes replacing them with RRSP contributions, or trying to convert them to defined contribution plans. These plans only guarantee how much an employee will pay; their retirement income and benefits are unpredictable and can vary dramatically. For unions that have won defined benefit plans, holding on to them has emerged as the definitive struggle in recent years.

Many defined benefit plans have also accumulated unfunded liabilities, where the projected expenses required to meet guaranteed obligations exceeds the amount of money set aside. This can be due to a variety of factors: poor investment or management of the plan, failure by the employer to make annual contributions and the simple fact that people are living longer and thus drawing pensions for a longer period after retirement. This was what Newfoundland and Labrador faced. Pension liabilities, together with other post-retirement benefits, comprise 74 per cent of the province's $9.8 billion debt.

This was the situation the unions and government sat down two years ago to try to fix.

Tom Marshall was provincial finance minister and pensions had been on his mind since he entered politics in 2003. In reviewing the province's finances, he realized how big the pension problem was.

"When I read that, I felt overwhelmed," he admits, laughing now with hindsight. "I thought, oh god, this is so big. We'll never get through this. I can see why so many other governments never dealt with this."

Marshall was finance minister three times. Each time, he tried to tackle the pension issue. And to do so, he reached out to the unions.

But each time, obstacles got in the way. At first, Marshall wanted the unions to take over joint management of the plan. The unions refused, as they felt the unfunded liability was the government's fault, and government's responsibility to deal with.

Marshall's cabinet colleagues were reluctant to tackle the issue. It was daunting and politicized, and many preferred to avoid it even though, Marshall felt, the urgency would only grow the longer they put it off.

Then he became premier. "And it's easier when you're premier to convince your colleagues," he laughed modestly.

Building relationships, building trust

Carol Furlong, president of the Newfoundland and Labrador Association of Public and Private Employees (NAPE), figured that with Marshall as premier, there was a chance to reach resolution on the issue.

"We knew that Tom Marshall favoured a defined benefit plan," she said. "In fact, when it comes to the Canada Pension Plan changes, Tom Marshall both as minister of finance and as premier, has championed that cause. A pension plan is a very important asset … not only for employers, but employees too – it affects people later on in life, their purchasing power and everything else."

When asked whether he supports defined benefit plans, Marshall doesn't hesitate.

"I do," he declares firmly. "My family were merchants. Small retail storekeepers. Pensions were not part of our lives. Things happened in my life that made me realize the benefit of a defined benefit pension plan."

Many of his friends and neighbours retired with defined benefit plans, "…and [they] had a decent retirement. And then I realized, based on what I'd read and what I'd seen, that people who had a defined contribution plan, or RRSPs, they were not having a decent retirement."

"Pensions have become such an issue, everywhere," he says. "Our province supported the work the Canadian Labour Congress was doing to get improvements to the [Canada] pension plan…We worked with people like Hassan Yussuff of the Canadian Labour Congress, he was the leader on that. But we were unsuccessful in convincing the federal government to bring changes."

When he became premier, he reached out to the unions again.

To negotiate or not to negotiate?

But it wasn't easy. There were those on the union side who felt that because it was the government's problem, negotiating might mean having to compromise. Yet, failing to negotiate a compromise might have resulted in a greater loss: the government could legislate its own solution at any time, despite the demands of the unions. It's the sort of morally complex dilemma unions increasingly face, and there's no easy answer.

"We felt we needed to engage government over this and have some control over the solution" said Furlong. "Part of the issue for us at the time…was that we were engaging with a whole new landscape and we didn't know what that landscape would look like." 

At the time, a pitched leadership battle was underway within the governing PC party. One of the leading candidates was a conservative business leader. Union research revealed that he owned private liquor stores in Alberta, and they felt he was unlikely to be as open to negotiation. He won the leadership vote, but subsequently resigned for personal reasons. This triggered a second leadership convention that left Marshall in office for a longer period than anticipated. Unions felt their best bet was to move proactively forward to negotiate a deal with Marshall before he left office.

"It was a tough negotiation," said Debbie Forward, president of the Nurses' Union. "There were many times that government walked away, and there were a few times when we said this is a critical issue to us and we're not moving on it. But we also saw when we needed to be flexible…We pushed government as far as we felt we could push them without walking away, and they certainly used that stick of legislation over us."

"The positive part…was that [both sides wanted] young people to stay in this province," said Furlong. "We have a major problem with our workforce population declining. Recruitment and retention is important to us. So we're going to make this pension plan enticing to you [young workers] to come into the workforce. And generally when people come into the workforce with a pension plan, they stay…We want you to stay here."

Solidarity forever is harder than it sounds

With five unions with different histories, different memberships and different styles of decision-making, solidarity was something they had to work at.

"We resolved our differences at our table and we made sure we presented a unified voice when we presented to government," said Forward. "I believe [we] capitalized on the expertise within our union groups and used that in a positive way. When we knew that one union had an expertise in one area, we used that expertise when we met with government."

Playing on each other's strengths helped them maintain solidarity. NAPE was the biggest player in the province but CUPE, while smaller in provincial membership, had a staff of pension experts in Ottawa who played a key role in helping the coalition with research and strategy. Other unions contributed in other ways.

Forward was adamant about the value of a government that's willing to work together with its unions, as opposed to cultivating an aggressive or confrontational relationship with labour.

"It was done without confrontation…we were willing to give a little, and government gave a little as well. It sets a positive template for what positive things and what good can happen when you actually have meaningful discussion, consultation, and negotiations."

"I believe they [government] truly did want to find a consensual solution, rather than go to legislation," said Furlong.

Did Marshall consider using legislation, instead of negotiating?

"We looked at that," he admitted. "But we didn't really want to do that. It was in everyone's interest to work this problem out."

Lessons to learn

Mary Shortall, president of the Newfoundland and Labrador Federation of Labour, was not involved in the negotiations, but is thrilled at what was accomplished.

"It's huge, really. [Pension reform is] happening in every province, and some of the provinces have had a lot less success. No matter who the government is, getting together and negotiating together and having your homework done on the impact it will have on your members; fiercely working for what's best for your membership; and strategically planning – it all pays off."

Another lesson was that defined benefit pension plans can be protected in spite of the increasingly aggressive lobbying of corporate interest groups.

"Keeping a defined benefit plan is really important," said Shortall. "It's the difference between dignity and despair in retirement."

"People are living from paycheque to paycheque," said Furlong. "Any increase in contributions for anyone for anything is a hardship. Our members are no different, and at the end of the day we need to make sure that people have some ability to enjoy retirement without heading off to a food bank."

Shortall concurs. This is a victory that she hopes will inspire unions across the country.

"It really shows how action can work. It has set a template for the rest of the country."

"It shows that no matter who the government is, we need to be on top of the issues and be optimistic that change can happen. As unions, we have two ways of dealing with issues – talking about it, or going to the street. We have done both, and we will do both. But when you can talk to government about these issues, it certainly helps."

Marshall says that if there's a take-away lesson for other provinces, it's about the importance of government working with the labour movement.

"What I would say [to other provinces] is that the union leadership understand this issue as well as we do…I would say to other governments, before you move with legislation, engage with the union leadership and make an effort to work it out. Everyone understands the problem and that we got to fix it. Let's do it now."

Hans Rollman is a graduate student (PhD in Gender, Feminist & Women's Studies) at York University and an editor and writer. He is a reporter and editor with the independent media site TheIndependent.ca, and has been published in a range of other publications including Briarpatch Magazine, Macleans On-Campus, Feral Feminisms and more. 

Image: rabble.ca




We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.