The Government of Alberta has proposed a number of changes to public sector pensions such as no benefit improvements until 2021 and a reduction in cost-of-living adjustment (COLA).
“We recognize that there’s no crisis today, but it’s the long-term sustainability that we need to address in these plans,” says Doug Horner, president of the Treasury Board and minister of finance.
The proposals are for the Local Authorities Pension Plan, the Public Service Pension Plan, the Management Employees Pension Plan (MEPP) and the Special Forces Pension Plan.
Currently, the four plans have six contributing members for every four inactive members. Twenty years ago, there were four contributing members for every two inactive members.
Following are some of the proposed reforms that will take effect on or after Jan. 1, 2016:
- There will be a moratorium on benefit improvements until Jan. 1, 2021.
- COLA on benefits earned after 2015 will be targeted at 50% of Alberta’s inflation rate, but it will no longer be guaranteed; those already receiving pensions by the end of 2015 will continue to receive their pensions, including COLA, covering 60% of Alberta inflation.
- The MEPP will be closed to new members at the end of 2015.
From now to the end of December 2013, the government will be consulting with employee and employer stakeholders of each of these plans and other proposals.
The province will take these responses into account as it prepares legislation for next spring.
The proposals are available on the provincial government’s website.
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