Pending legislation takes ‘politics out of pensions’
EDMONTON An overhaul of Alberta’s public sector pensions has the government relinquishing control of $60 billion in fund assets.
Changes to Alberta’s three largest public plans currently must be approved by cabinet.
Legislation tabled by Finance Minister Joe Ceci Tuesday removes that requirement, giving employers and employees ultimate control over the benefits, design and financial health of their pensions through new sponsor boards.
“The legislation we introduced today takes the politics out of pensions,” Ceci said at a Tuesday afternoon news conference.
“By making this change, pension decisions aren’t imposed on plan owners, but instead are made by plan owners. It just doesn’t make sense under the current structure for the minister to have to sign off on decisions that employers and employees have already agreed to.”
Tuesday’s bill doesn’t change benefits or how plans are funded, merely how those funds are controlled.
It’s the biggest governance and regulatory overhaul of Alberta’s major public-sector plans since pension reforms in 1992.
It affects around 351,000 current and retired public-sector workers under the local authorities, public service and special forces pension plans — employees of Alberta Health Services, school boards, post-secondary institutions, cities, the provincial government, firefighters and police, for example.
If passed, the changes tabled by Ceci Tuesday will create a joint governance structure similar to those in other provinces.
It separates duties and creates a model where plans have a sponsor board and corporation working hand-in-hand to look after pension funds.
Sponsor boards will have an equal number of seats for employee and employer groups, with representatives selected by those groups. The sponsor board will make or amend plans, set contribution rates and funding policy, review the budget and establish a process for recruiting directors.
It’s written into legislation that the sponsor board must also take into account the needs of workers who have already retired.
The corporation becomes the administrator or fund holder, and will be in charge of setting investment policies, conducting actuarial valuations, communicating with plan members and liaising with regulators. The sponsor board sets the pension deal, and the plan corporation delivers on that deal.
Former auditor general Merwan Saher slammed successive governments’ management of pension plans in a 2014 report. Later that year, the Progressive Conservative government forged ahead with reforms via the Public Sector Pension Plans Amendment Act, despite objections from unions.