Provincial pension reforms ‘unjustified,’ says union

$7.4B unfunded liability will go away without help, says study

Union leaders say an independent study shows the Alberta government’s proposed cuts to the province’s public pension plans are unnecessary and could amount to a 25-per-cent clawback in benefits, starting in 2016.

Last September, Finance Minister Doug Horner unveiled a proposal that included a series of changes to address a $7.4 billion unfunded liability in Alberta’s four public pension plans.

But a report by a B.C.-based actuary firm commissioned by a coalition of unions shows the unfunded liability will disappear in about nine years, even if the province makes no changes to benefits already included in the plans.

Among the three key recommendations included in the government’s proposed changes was a plan to scrap incentives for early retirement and begin allowing employees to pay into their pensions longer than the current 35-year maximum.

The province also wants to introduce a cap on how much employers and employees can contribute to a plan and get rid of guaranteed cost-ofliving adjustments that are tacked on to annual pension earnings.

Those proposals are unnecessary, said the study conducted by George & Bell, an actuarial consulting firm based in Vancouver.

Instead, the pension funds’ unfunded liability will disappear if the government simply does nothing, Alberta Federation of Labour president Gil McGowan said at a Tuesday news conference attended by the heads of four of the province’s largest public sector unions.

“Contrary to what we’ve been hearing from government over the past couple of months, the George & Bell report shows the province’s two largest public sector pension plans are healthy and in fact, getting healthier,” McGowan said.

The report’s projections are based on a roughly 6.6-per cent annual investment return over a 30-year period.

Heather Smith, president of the United Nurses of Alberta, said the pension plans don’t need an overhaul.

“It’s a manufactured crisis. It’s totally unjustified.”

The coalition of unions that commissioned the study has provided a copy to Horner, who Tuesday dismissed its findings.

“People are living longer, there’s a lot more retirees, there’s a lot less people paying into the plan. That’s real. It’s not being made up. It’s out there, today,” Horner said.

The unions pointed out those challenges wouldn’t be as tough in Alberta as they would be elsewhere because the province’s workforce is the youngest in Canada.