Status: Bill 27 passed Dec. 5, 2018
Ministry responsible: Treasury Board and Finance
The Joint Governance of Public Sector Pension Plans Act, will transition the Local Authorities Pension Plan, the Public Service Pension Plan and the Special Forces Pension Plan to a joint governance structure.
Under joint governance, employee and employer groups will share control of plan design and responsibility for the financial health of the plan. Prior to this legislation, government had final approval on changes to the pension plans, including benefits.
New joint governance structure
The new legislation will:
- give employee and employer stakeholders equal say in how their pension plans are managed and control over plan design (benefits, rules, eligibility and contributions)
- separate sponsor and administrator/trustee functions and clearly define roles and responsibilities
- create a sponsor board for each plan, with an equal number of seats assigned to employee and employer sponsors
- each plan will have its own corporation that would perform administrator and trustee functions
- allow employee and employer groups to nominate representatives to sit on their sponsor boards as well as the corporation boards with no final approval required from government
- continue plan services with AIMCo and Alberta Pensions Services for a period of 5 years, after which plans can choose to renew their agreements or consider new options
- introduce protections for plan members to remain in their plan if there is an employer restructuring
Sponsors determine benefits, not government.
The new legislation only changes the governance structure. There will be no change to how plans are funded or plan benefits.
Under the new joint governance structure, future benefit plan changes will be determined by sponsor boards, not government, and will be subject to discussion and agreement between employer and employee sponsors.
Employer and employee sponsors will also share responsibility for the risks associated with funding defined benefit plans, including the risk of investment losses that may require changes to contribution rates and/or benefits.
Retired member benefits will not be affected, and sponsor boards will be required to consider the interests of retired plan members before making decisions.
The plans will be registered under the Employment Pension Plan Act (EPPA) and subject to regulatory oversight by the Superintendent of Pensions.
The Joint Governance of Public Sector Pension Plans Act will come into effect fall 2018 and plans will be transitioned March 1, 2019.
Regulations would be updated in early 2019 to:
- create new sponsor boards for each plan
- amend EPPA regulations to provide the plans with exemptions, where required, to preserve current plan design
- clear up provisions in other regulations that will no longer be required once the plans are transitioned to joint governance
- update and clarify the participating employers in each plan prior to the transition date
Following the March 1, 2019 transition, the new sponsor boards will have the authority to amend board composition and make plan changes.
Benefits of joint governance
- Clear roles and responsibilities
- Sponsors responsible for financial health of plan and plan design
- Shared trusteeship of plan assets
- Equal representation of employer/employee groups on the sponsor boards
- Improved accountability
- Service provider choice
- Protections for plan members affected by a restructuring
- Total number of affected employers: 450
- Total value of affected plans' assets: $59.3 billion
- Total number of affected plan members (active, deferred and retired): 351,210
*As of December 31, 2017
If you have questions about the changes, please contact email@example.com
- New governance proposed for pension plans (Nov. 20, 2018)