Sunday, August 4, 2013

The New Brunswick Approach

From The New York Times editorial page today - Pubic Pensions After Detroit:

"All states and cities — and not just those facing imminent crisis — would do well to examine a promising approach to pension management recently adopted by the Canadian province of New Brunswick with the support of the province’s labor unions.
      
New Brunswick’s approach splits benefits for retirees into two tiers: base and ancillary. The idea is to guarantee basic benefits and allow ancillary benefits (like cost of living adjustments) to fluctuate based on the health of the pension fund. If a fund’s investments fall too much, the government kicks in more money and retirees do not get some of the ancillary benefits. If it does better than expected, employers recoup some of their earlier contributions and workers get bigger monthly pension checks."

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