While a Calgary councillor’s proposal to review all municipal pensions was passed to a city committee for further study in late April, local unions are still concerned.
Councillor George Chahal, who put forward the proposal, says the city should review its pensions because the related costs for both unionized and non-union workers are rising at double the rate of Calgary’s overall budget increases from between 2009 and 2017.
“The City of Calgary spends over $200 million on pension-related benefits, which is five per cent of our total budget and 11 per cent of our total compensation, and it’s been growing at a much faster rate,” he says. “I wanted to uncover why that is happening.”
Chahal says the purpose of his proposed review was also to ensure the city’s pension plans were continuing to serve their members.
“I thought it would be a really good idea to just open this up and have a look at all the plans we offer and ensure they meet the needs of our employees for today and for the future,” he says. “Do we have the right plan for the employees at the City of Calgary, and are they being governed well . . . and do we have good financial stewardship of these plans to ensure they have long-term sustainability and viability for employers and employees?”
During an April 30 council debate, staff from the city’s administration said a full review by an outside expert could cost significant money and time, and councillors ultimately voted to send it to the audit committee for fine-tuning.
“I do believe it’s a step in the right direction,” says Chahal.
However, unions representing municipal employees are calling the proposed review unfounded.
“It’s really disappointing when you see council members playing politics with the pension,” says D’Arcy Lanovaz, president of the Canadian Union of Public Employees Local 38, which represents 4,200 city workers. “A pension is about people’s retirement, it’s part of their compensation package.”
Lanovaz says while the motion was presented as just a review, “it appears that what is being planned is a plan redesign, not simply an audit.”
The majority of city employees are part of the Local Authorities Pension Plan, a multi-employer defined benefit plan with more than 420 employers across three sectors. The LAPP is the largest of the city’s pension arrangements. The city also contributes to the Special Forces Pension Plan for Calgary police and multiple small supplementary pension funds.
Chahal says he wants to make sure Calgary is insulated from experiencing similar pension problems as the cities of Montreal and Regina.
Mike Henson, president of the Calgary Firefighters Association, says he doesn’t believe there’s a need to review the pensions. He notes the LAPP was 104 per cent funded as of a 2017 evaluation. “The pension is very healthy, so there needs to be an education for the councillors on the facts,” he says.
Lanovaz adds pension contribution rates for the LAPP have come down yearly for the past four years because of the surplus.
“LAPP is highlighted as a model for pension plans across the country,” he says. “Councillors, frankly, are choosing to withhold critical information and are misrepresenting the state of the pension plan.”
Chahal says he was surprised by the outcry from the city’s unions. “I’ve been very clear that this isn’t an attack on anybody,” he says. “I’m here to protect the residents of the City of Calgary . . . and make sure we protect our employees.”
He notes that due to the joint governance structure of the LAPP, enshrined in law by the provincial government, the review would not enable city council to make any changes to the plan.
“Any changes to any multi-employer pension plan would have to be agreed upon through joint governance. That takes politicians out of those discussions and brings back the employee and the employer working together collaboratively, and ensures the plan meets their needs for the long-term.”
It would also mean the only way for the city to make changes would be through union contract negotiations, Henson says. “Our plan is in our collective agreement . . . so any changes would have to go through that process.”