Bill 27 intended to take politics out of decisions about Alberta public-sector pensions
Politicians would be removed from making decisions made about provincial public-sector pension plans under a new bill introduced Tuesday in the Alberta legislature.
Bill 27 proposes a joint governance model, where decisions about the three main Alberta pension plans would be made and implemented by boards with equal representation from the unions and employers.
Under the current model, decisions about pensions and benefits are made by cabinet ministers, with the minister of finance designated as the trustee and administrator of the plans.
Finance Minister Joe Ceci said B.C. and Ontario use a joint employee-employer governance model for public-sector pensions, which is considered current best practice. He says the NDP promised to make this change in their 2015 campaign platform.
"The legislation we are introducing today takes the politics out of pensions," Ceci said. "We're putting control in the hands of people who contribute to the plans. Both employers and employees.
"By making this change, pensions decisions aren't imposed on plan owners but instead are made by plan owners."
Supporters say the proposed changes could have prevented the situation that arose in February 2014, when Alison Redford's Progressive Conservative government introduced Bill 9, which proposed major changes to public-sector pensions.
The bill's most contentious feature was a jump in the age at which public sector workers with 30 years of service could retire with full benefits.
The changes were proposed without prior consultation with unions, which prompted protests by members across the province. The bill was referred to an all-party committee several months later, and died on the order paper when the legislature was prorogued in September 2014.
Guy Smith, president of the Alberta Union of Provincial Employees, referenced the Bill 9 fight in a news release supporting the government's new legislation.
"This legislation will bring more certainty for members, whose pension funds were previously under the direct control of governments that were sometimes more driven by political motivation than what is in the best interest of workers," he said.
The Official Opposition United Conservative Party is reserving comment on the bill until their MLAs have a chance to review it.
Transition planned for March
Bill 27 will not affect how the plans are funded nor the benefits given to employees. If passed, the transition to the new governance model would happen on March 1, 2019.
The plans affected by the bill are:
Local Authorities Pension Plan (LAPP) - includes nurses and health-care workers employed by Alberta Health Services, municipal employees, and support and administrative staff at school boards;
Public Service Pension Plan (PSPP) - includes government of Alberta employees and non-academic staff at the University of Alberta, University of Calgary, and seven other post-secondary institutions, and;
Special Forces Pension Plan - police officers in Calgary, Edmonton and other municipal forces covered by the plan.
The governance model proposed under Bill 27 separates the decision making and administration functions and places them under two separate boards.
The sponsor board would have equal representation from unions and employers, and would set contribution rates, review the budget and make decisions on changes to eligibility and benefit levels. It would also take the interests of retirees into account.
The corporation board would be in charge of administering the plan, setting investment policy, communicating with plan members and working with regulators.
There are 351,210 active, deferred and retired members of the three pension plans.
Public sector pension plans in British Columbia and Ontario also use a joint governance model.
The government spent the summer consulting with unions and employers about a new governance structure. The consensus was that a joint employee-employer model was the best.
