EX-AHS brass get pension bonanza
Supplementary plans cost taxpayers $35M
The controversial bonus pension being paid to former Alberta Health Services CFO Allaudin Merali is just one of 50 supplementary pensions taxpayers will be shelling out to former health executives for a number of decades.
The total cost of the goldplated supplementary plans? More than $35 million, according to the most recent AHS annual financial statements.
Merali’s $13,303 monthly pension — paid on top of his regular pension — was part of a pay package he received when he worked for Edmonton’s Capital Health Region between 2005 and 2008. He was also paid a $1-million severance when he left and provided a supplementary pension worth $1.6 million over 10 years.
Rehired by AHS three months ago, Merali made headlines last week when it was revealed he billed Capital Health almost $350,000 for expenses during his previous employment there. His new contract with the superboard was ended last week by mutual agreement.
But the organization’s 2011-12 annual report shows AHS is on the hook for many similar supplementary pensions.
AHS president and CEO Chris Eagle stands to collect nearly $1.4 million from a supplemental executive retirement plan when he steps down, while executive vicepresident and chief medical officer David Megran will s core $763,000 over and above his regular pension.
AHS executive Bill Trafford, chief development officer, will take a $678,000 supplementary pension with him when he leaves.
Pam Whitnack, a former vice-president responsible for rural, public and community health, departed last year with an $853,000 supplementary pension, while Andrew Will, vice-president responsible for clinical services and later leader of the transition team, left with a supplementary pension of $171,000.
In most cases these figures are addition to an already generous pension plan.
Health Minister Fred Horne said Thursday the plans were negotiated by the former regional health authorities with executives before the regional authorities were dissolved into the Alberta Health Services superboard.
“All of the health regions had their own contract arrangements with their own executives, so I can’t really explain why they were in place or what they consisted of,” he said in an interview. “Those would have been decisions made by the boards and senior management of the former health regions.”
AHS chief operating officer Chris Mazurkewich defended the bonus pension plans, saying they’re needed to recruit top executives and were previously arranged by the regional boards.
“In essence, it’s to compensate people fairly compared to similar health-care organizations in other public sector places. You go to other public sector places, you’ll find the same kinds of programs,” he said.
“In order to compete for management talent and clinical talent, we have to pay people fairly compared to peer organizations.”
But opposition critics expressed shock at the costs,
calling the plans “unnecessary,” “outrageous” and “obscene.” “It looks like senior Progressive Conservativeappointed health executives make off like bandits while long-term-care facilities can’t be built and seniors are eating food that is disgusting,” said Wildrose critic Shane Saskiw. “Front line staff don’t see anything like this.”
NDPcritic Dave Eggen said the supplementary pensions are a reflection of a “culture of entitlement” stemming from 41 years of Progressive Conservative government.
“They have created this environment where people expect extraordinary pay for ordinary work,” he said. “Most ordinary Albertans find it insulting.”
Liberal Leader Raj Sherman said the money spent on bonus pensions for executives should have been spent on improving the health-care system.
“It’s a really a slap in the face to Albertans,” he said. “This money could be put to better home care and more front-line nurses and staff. This is money that could have been used to shorten waiting lists and provide better care.”
Scott Hennig, Alberta director of the Canadian Taxpayers Federation, said supplementary pensions conceal how much money executives are actually being paid.
“It’s just a way to hide their salaries,” he said. “It isn’t transparent.”
Alberta’s auditor general warned of the risks of supplementary pensions in his 2005, 2008 and 2009 reports, expressing concern that the government agencies were creating a future liability for taxpayers. In 2008, the cumulative costs of supplementary pensions totalled nearly $48 million against assets of $7.5 million, the auditor general noted in the 2009 report.
Auditor general Merwan Saher said in an interview that his office was also concerned the benefits being paid to specific executives through supplementary pensions weren’t clearly set out in financial documents.
He said disclosure has since improved and the pension plans are now fully funded. “We’re satisfied now that the nature of these arrangements is fully explained with additional disclosures in the salary directive,” he said.
In response to the auditor general’s recommendations, AHS gradually moved from a defined-benefit supplementary executive retirement plan to a defined-contribution plan and set assets aside to ensure the future costs of the plans were covered, AHS spokesman Kerry Williamson said in an e-mail.
The new supplementary plan, which provides a benefit based on fixed contributions with pension payments subject to the success of the fund’s market investments, is significantly less costly to AHS both in terms of benefits and administration, he said.
The two plans cost Albertans nearly $4.3 million last year alone.