The Alberta government is gathering feedback from stakeholders to help inform potential legislative and policy updates for private sector pension laws.
The consultation will focus on the Employment Pension Plans Act and the Employment Pension Plans Regulation, according to a press release, which noted Alberta’s private sector pension legislation hasn’t been significantly updated since 2014.
According to the consultation paper, Alberta is one of the few major pension jurisdictions in Canada that still requires most private sector plans to fully fund for solvency, noting recent stakeholder feedback identified this requirement as a contributing factor to reduced pension plan coverage and hardships for retirees.
“For Alberta companies that have or participate in a defined benefit or target-benefit pension plan, legislative and regulatory disparity may mean that Alberta is seen as a less competitive jurisdiction,” said the paper. “We’ve heard from stakeholders that, because Alberta imposes this funding requirement, it causes a competitive disadvantage due to increased costs, increased contribution volatility and need for the government to provide temporary funding relief and may, overall, contribute to plan closures and lack of creation of new pension plans, thus resulting in less pension plan coverage for Albertans.”
Jordan Fremont, a partner at Bennett Jones LLP, says the consultation represents an opportunity to refine Alberta’s pension legislation through alignment with other jurisdictions on issues such as funding requirements. “It’s a perennial issue in Canada — there’s always interest in aligning legislation, but there remain differences. There’s an ambition for alignment, but it’s always subject to the caveat of ‘where it makes sense to do so,’ based on the particular interests of a particular jurisdiction.
“The government seems open to thoughts and doesn’t seem to be determined to go in any particular direction [on funding requirements],” he adds. “They lay out certain options or considerations that have been introduced elsewhere that could make sense.”
Fremont notes the consultation is also asking for input on legislative changes around automatic features in defined contribution pension plans. “[The government] recognizes in the paper there’s some disconnect [regarding automatic features] as to what’s permitted under employment standards legislation, so there may be an opportunity to provide some input around that legislation.”
Government will meet with committees of representatives from various pension plan stakeholders this fall to share findings from the engagement and discuss next steps, said the release. Comments are requested by July 29, 2022.