Although it’s somewhat late in the making, Alberta’s new pension legislation proposing a joint governance structure for three of the province’s largest pension plans appears to have kept up with the times.

“The legislation is a made-in-Alberta plan that takes into account that almost 25 years have passed since we first saw this type of legislation in Canada,” says Ari Kaplan, a pension mediator and lawyer who represented one of the stakeholders in the extensive negotiations leading up to the law’s tabling at the end of November.

The three plans to whom the new structure will apply — the Local Authorities Pension Plan, the Public Service Pension Plan and the Special Forces Pension Plan — boast some $60 billion in assets.

Read: Alberta tables legislation on joint governance of public sector pensions

The first iteration of joint governance in this country came in 1995, with Ontario’s introduction of the OPSEU Pension Trust. British Columbia followed with its own version of joint governance in 2001. Although successive Conservative governments had promised to enact such a structure in Alberta for almost 30 years, it was Rachel Notley’s NDP government that finally moved on the issue.

The government is opting for a bicameral governance structure, which consists of two groups, each with employer and employee members, and each managing different aspects of the pension plan while working collaboratively.

The sponsors entity provides strategic and risk oversight and decision-making with regard to pension design, benefits and contribution levels. The administrative entity brings strategic, risk and operational management by serving plan members, collecting contributions, paying pensions and investing the plan’s funds.

Read: Public sector pension changes coming when Alberta legislature resumes

What distinguishes the Alberta regime from a traditional bicameral structure is that both the sponsor and administrative boards are constituted as formal legal entities by statutory provisions that dictate the boards’ composition and describe their functions. But while the administrative entity is a formal corporation, the sponsors entity is not. The upshot is that the lack of formality allows the sponsor board to function in a more informal manner that can be seen as an extension of the way collective bargaining works.

The closest parallel in Canada is the governance structure of the Ontario Municipal Employees Retirement Board. While it too features a bicameral structure, both its sponsor entity (the Sponsors Corp.) and administrative entity (Ontario Municipal Employees Retirement Board) are formal corporations subject to corporate law.

“The advantage of the Alberta model is that the lack of formality gives the sponsoring group more flexibility and makes it easier to get things done,” says a veteran pensions lawyer who spoke on condition of anonymity because of their involvement in the negotiations.

Read: Alberta pension plan wins communications award for approachable, original website

Also unique to the Alberta legislation are provisions mandating the continued use of the plans’ current administrative and investment advisers, namely the Alberta Pension Services Corp. and the Alberta Investment Management Corp., for five years. Both entities are Crown corporations.

With a proposed implementation date of March 1, 2019, the legislation is expected to receive swift passage with certain provisions coming into force on proclamation. According to pension lawyers, that’s not surprising.

“I can tell you that the joint governance model has worked extremely well in Ontario,” says Jessica Bullock, a pension lawyer at Davies Ward Phillips & Vineberg LLP. “And that’s a good thing because the appropriate group to control a pension fund is one made up of the stakeholders. I can’t think of any disadvantages in doing that.”

Besides, joint governance allows the public purse to shed some weight.

“There’s a bit of a costs savings there for the government, and that’s bound to be popular,” says Susan Philpott, a pensions lawyer at Goldblatt Partners LLP.

Read: Important considerations in DB pension communications

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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