Nova Scotia’s auditor general has found the Nova Scotia teachers’ pension plan is in “very concerning financial shape” and that there are “significant weaknesses” in financial controls at several organizations in a report released Wednesday morning.
Michael Pickup says the teachers’ pension plan is funded at only 77.7 per cent with a deficit of $1.4 billion. It’s an issue the report says may result in teachers never getting pension increases.
“It is troubling that while there is a $1.4 billion deficit in the teachers’ pension plan, there is no clear plan how this deficit will be dealt with and this may impact all Nova Scotians now and in the future,” said Pickup in a news release.
“Teachers and Nova Scotians need to ask why this plan is in such worrisome financial shape and what will be done to fix it. Teachers and the economy count on this plan that had a payout of $2 billion in benefits to retired teachers in the past five years alone.”
PC MLA Tim Houston was surprised by the shortfall in the teachers’ pension plan.
“That can’t be a good feeling for those teachers, particularly with what just happened with the wage situation in this province, particularly with what just happened with their long service awards,” he said.
“Now to get the triple hit, that your pension is probably not going to increase over your lifetime, that cannot be a good feeling.”
The deficit is shared equally between teachers and the province, meaning each side is responsible for $700 million.
That’s something Kevin Lacey, the atlantic director of the Canadian Taxpayers Federation is concerned about.
“Every taxpayer in Nova Scotia should be worried about this because we could foot the bill for such a huge a huge amount of money that is being faced by this and this is not just a problem for teachers but it’s a problem for each and every one of us that pay taxes,” Lacey said.
Lacey says he only sees two options for the pension plan: either reduce benefits or have teachers pay more into their pension plan.
“Doing nothing is not an option because at some point, it will simply run out of money unless the province either increase the revenues or decrease the benefits,” said Lacey.
Premier Stephen McNeil says the plan has been underfunded for some time but that there won’t be a government bailout.
“We’ll get down and look at the options that are before us and I believe there are other ways we can deal with the whole issue but it will take our partners wanting to look at those different options and we’ll come up to an option that we believe is fair to teachers and fair to taxpayers,” said McNeil.
Pickup found the both the health care and public service workers’ pension plan was funded at over 100 per cent.
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The report found although government presented reliable financial information, there were significant weaknesses in financial controls at several organizations including Housing Nova Scotia, the Nova Scotia Health Authority and the IWK Health Centre.
Pickup also found 88 per cent of organizations, including the IWK Health Centre and the Nova Scotia Liquor Corporation, have not completed a fraud risk assessment. In addition, the report says 33 per cent of government organizations surveyed by the auditor general had vacancies on their boards, which was “potentially risking oversight.”
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“While the government can be commended for producing reliable financial statements, it should fix the weaknesses in internal controls and gaps in overall fraud risk management that threatens the good use of public money,” Pickup said in the release.
In response, IWK Board Chair Karen Hutt says they making an effort to strengthen oversight and accountability.
“We support the suggestions made by the Auditor General; we welcome his involvement in undertaking a review and performance audit of our organization, something that was in fact requested by the IWK board,” Hutt wrote in a statement.
“Weeks ago, we engaged the Nova Scotia Internal Audit Group to do a Fraud Risk Assessment, and we are implementing all recommendations from the Grant Thornton independent review, with weekly updating on progress to the Board. This is all being overseen by the board’s Finance Audit and Risk Committee, which is chaired by Jennifer Mills.”
The auditor general will discuss his latest findings Wednesday afternoon at a news conference in Halifax.
A full copy of the report can be found here:
More to come.