The Alberta government has introduced Bill 10, the Employment Pension Plans Act, in the provincial legislature. The bill aims to allow plan administrators to more easily develop pension plans that meet the needs of employers and employees.
The proposed act represents the first major rewrite of private sector pension laws in 25 years, and was written to take into account estimates that just one in six Albertans working in the private sector belongs to an employer-sponsored pension plan.
“The private sector has been asking for solutions that help them deal with some of the challenges associated with an employer’s ability to offer pension plans,” said president of Treasury Board and Minister of Finance Doug Horner. “At the end of the day, we’ve been striving for more options to help Albertans be better prepared for a financially secure retirement, and this legislation is another step in that direction.”
The legislation deals with matters of funding, investment, how information is disclosed to members, and member entitlement to benefits. Highlights include the following:
- harmonized pension rules between Alberta and British Columbia, which would enable the start-up and operation of pension plans by employers who operate in both provinces;
- more flexibility in pension standards, allowing private sector employers to design pension plans that meet both their needs and the needs of their employees;
- extended timelines for dealing with funding shortfalls;
- more clarity around the roles and responsibilities of those involved in managing pension plans;
- standards for target benefit plans and jointly sponsored plans;
- increased focus on disclosure, helping all parties understand the terms, risks and health of their plan, as well as their responsibilities around the plan;
- changes to qualification for vesting, from two years of plan membership to immediate; and
- locking in will no longer be based on years of service, but will be based on a minimum dollar amount that is increased annually. This would eliminate the locking in of amounts that are too small to provide a meaningful pension, and means that locking in rules keep pace with inflation.
The proposed act is the result of work started when the governments of Alberta and British Columbia appointed an expert panel to look into ways to harmonize and modernize the two provinces’ private sector pension legislation. The panel conducted extensive consultation with private sector employers, the pension industry and others to develop their final recommendations.
“Sun Life Financial welcomes the introduction of this legislation,” said Randy Colwell, regional vice-president for Sun Life’s workplace retirement business in Western Canada. “The new legislation will make it easier for employers to establish pension plans, providing more Albertans with access to a convenient way to save at work.”
Karen Hall, vice-president, retirement, with Aon Hewitt, echoed those sentiments. “Bill 10 is a significant step forward in providing for legislation that is flexible enough to accommodate innovative pension plan designs such as target benefit pensions”, she said. “The target benefit concept is definitely an idea that holds promise for achieving sustainable retirement income for Canadians.”