FREDERICTON - The City of Saint John was beset last year by debate over its gaping $195 million pension deficit so bad that a consultant reviewing the plan described it as the worst she's ever seen.
Since then, city councillors have voted to adopt a pension model that would spread the risk for future deficits between workers and the city in the hopes of ensuring its solvency.
The idea is gaining support among both unions and other municipalities.
Gordon Black, the regional director for the Canadian Union of Public Employees, said he welcomes Saint John's move because it will correct "a terrible mess."
"Employees of the City of Saint John are going to have a pension now and into the future," he said. "It protects retirees and gives current employees a pension for the future."
The City of Fredericton is grappling with a pension deficit that grew from $33 million to $59 million in the past year because its retirees are living longer. It has asked a provincial task force studying the issue to devise a model similar to the one in Saint John.
"Your deficit can change overnight, and that's what happened in Fredericton," said city councillor Mike O'Brien.
Susan Rowland, the head of the provincial task force, has been working with municipalities that have been hit with substantial increases in their pension deficits as a result of falling stock markets since 2008 and a growing lifespan among retirees.
Rowland said creating a single, province-wide plan may be the best option for New Brunswick's 104 municipalities because it could provide savings of six to seven per cent in financial and administrative costs.
She said the task force has not made a formal recommendation for a single plan, but it is gaining support as it travels around the province.
She said it could take 12 to 18 months to transition to a single municipal pension plan if New Brunswick were to follow that route.
The idea is also generating discussion at the Union of Municipalities of New Brunswick.
Executive director Raymond Murphy said he wants to hear what municipalities of all sizes have to say about a single plan.
But he said it could be a hard sell with some smaller municipalities that don't have the same deficit pressures as larger cities.
In Ontario, a single pension plan was created in 1962 for its municipal employees. The Ontario Municipal Employees Retirement System now has 430,000 members including police, firefighters and other city employees.
John Pierce, vice-president of public affairs for OMERS, said there are great advantages to having just one administration and a larger pool of money to absorb swings in the financial markets.
"OMERS is collecting about $2.7 billion in contributions and paying out about $2.4 billion in benefits and we still had about $55 billion in the bank at the end of 2011 in assets," Pierce said.
O'Brien said he also likes the idea of creating a single pension plan covering all of New Brunswick's municipalities.
"I think it is doable, but first you have to get most of the pension plans on a common basis," he said.
Rowland is expected to deliver a final report for the New Brunswick government near the end of this year.