February 24, 2014... The Honourable Doug Horner, President of Treasury Board and Minister of Finance, announced changes to four Alberta public sector plans: the Public Service Pension Plan (PSPP), the Management Employees Pension Plan (MEPP), the Local Authorities Pension Plan (LAPP) and the Special Forces Pension Plan (SFPP).
- Minister's Statement
- Letter from Minister Horner to Plan Members
- Letter from Minister Horner to Employers
- Pension Reform Overview
The changes follow a consultation process that began when Minister Horner asked the pension boards in July 2012 to make recommendations to government to ensure the sustainability of the plans. In September 2013, the Minister set out proposals for public consultation.
The government invited and received feedback on the proposals until December 31, 2013 and all of the feedback has been given careful consideration. Government has also reviewed the results of the Alberta Auditor General's audit of the government’s oversight systems for Alberta’s public sector pension plans. The Auditor’s report was released on February 13, 2014.
The Public Sector Pension Plans Amendment Act will be introduced in the spring of 2014 to enable the finalized changes.
View the presentation by Doug Horner, President of Treasury Board and Minister of Finance below. You may also view it in these formats (will open in a new window):
|A PLAN FOR YOUR FUTURE|
The government has announced changes to the four pension plans. The
All benefits earned until the end of 2015 will be preserved.
|LAPP CHANGES||PSPP CHANGES|
The following are available on the LAPP website:
The following are available on the PSPP website:
|MEPP CHANGES||SFPP CHANGES|
The following are available on the MEPP website:
No benefit changes are proposed for the SFPP at this time.
For further information on the other changes affecting the SFPP, please go to www.sfpp.ca.
The Government of Alberta and the boards of the public sector pension plans know that the public sector pension plans are facing risks and challenges. The Government and the Pension Boards have studied the issues thoroughly. The Boards have communicated extensively on the subject to the employers and unions whose members are in the plans. Find out the facts about pension reform here.
Minister Horner responds to Alberta Auditor General report
February 13, 2014
President of Treasury Board and Finance Minister Doug Horner has issued the following statement regarding the Auditor General’s report on the department’s oversight of Alberta’s public sector pension plans:
“We accept all of the Auditor General’s recommendations, which reflect their analysis that was completed in July 2013. Since that time we have continued work toward improving the public pension system." Read the complete statement.
Auditor General’s Report
In his report, the Auditor General notes:
- “Alberta’s public sector pension plans have significant unfunded liabilities and contribution rates have risen to levels where some employers do not want to pay more. At December 31, 2012 those unfunded liabilities totalled $7.4 billion.”
- “Albertans need to know if Alberta’s public sector pension plans are sustainable. The plans face retirees who are living longer and low interest rates resulting in large unfunded liabilities… it is important to properly cost plan benefits and assess the likelihood that they can be funded at a contribution rate acceptable to the sponsors while withstanding risks. Otherwise the sponsors may bear a higher cost than intended or beneficiaries may receive less than promised.”
- “These plans are not unique. Many other defined benefit plans face the same problem: they have significant unfunded liabilities and they risk having insufficient assets to meet their obligations unless they change something.”
Prior to announcing the proposed pension reforms in September 2013, the government undertook a review of the sustainability of the public sector plans, including a review of all material submitted by the pension boards relating to plan sustainability. The government also completed its own research, analysis and stochastic modelling. On the pension sustainability review, the Auditor General states:
- “The department has completed significant research and analysis on plan design, governance and sustainability risks as part of its review. This analysis supported the advice it provided to the minister." Click here for more information - updates coming soon.
Click here for the Alberta Pension Governance Research Project - Final Report, prepared by the Haskayne School of Business at the University of Calgary. The main purpose of this study was to provide a well-researched perspective on pension governance to help inform the Government of Alberta's decisions on potential reforms.
Pension plans around the world are facing challenges because people are retiring early and living longer, investment returns have been lower, and the ratio of pensioners to active members is increasing. Many plans are unsustainable in the long term if changes are not made. In Alberta, our public sector pension plans face the same challenges, which have resulted in funding shortfalls and dramatically rising contribution rates.
The Government of Alberta is making changes to improve the long-term financial health of the following public sector pension plans:
- the Local Authorities Pension Plan (LAPP),
- the Public Service Pension Plan (PSPP),
- the Management Employees Pension Plan (MEPP), and
- the Special Forces Pension Plan (SFPP).
Together these plans cover public sector employees across the province and have about 200,000 active members and more than 120,000 retirees and deferred retirees.
The Government of Alberta is no longer convinced that we have the right benefits at the right price to attract and retain our future workforce. Total contribution rates for employees and employers in these plans are 25% of salaries or higher and are among the highest in Canada. Despite high contribution rates, assets of $35 billion, and investment returns on par with other large pension plans, these four plans have unfunded liabilities totaling $7.4 billion.
It is not a crisis, but it could become one unless action is taken to set our pension plans on the right course.
From September 16, 2013 to December 31, 2013, the Minister set out proposals for public consultation to plan members and employers. Government took these responses into account and legislation to enable planned changes will take place in the Spring of 2014.
These changes are part of the Government’s commitment to Albertans that we will provide quality public services while living within our means.
Background document - Charting a New Course: A Vision for Public Sector Pension Plans (September 16, 2013)
The following document was released on September 16, 2013 for consultation purposes: Charting a New Course, A Vision for Public Sector Pension Plans.
Please note: this document has been superseded by: Pension Reform Overview (February 24, 2014).
The following frequently asked questions are available on the plan websites:
- Information for LAPP Members - LAPP website *
- Information for PSPP Members - PSPP website *
- Information for MEPP Members - MEPP website *
Other frequently asked questions are available below:
The links below are provided for your interest and convenience and will open in a separate window. Our Privacy Statement applies to the Treasury Board and Finance website only.
- Government of Alberta 2012-13 Annual Report and Consolidated Financial Statements
- Local Authorities Pension Plan website: www.lapp.ca
- Public Service Pension Plan website: www.pspp.ca
- Special Forces Pension Plan website: www.sfpp.ca
- Management Employees Pension Plan website: www.mepp.ca
- Ontario Teachers' Pension Plan website: Pension Evolution video
- Queen’s Printer website: Public Sector Pension Plans Act and Regulations
If you have any questions related specifically to your pension benefits, please contact Alberta Pensions Services Corporation:
- 1-877-649-LAPP (5277) for LAPP Members
- 1-877-889-MEPP (6377) for MEPP Members
- 1-877-453-1PSP (1777) for PSPP Members
- 1-877-809-SFPP (7377) for SFPP Members
If you are receiving a pension and have questions about your pension, please contact Alberta Pensions Services Corporation at 1-877-422-4748.
For general information on one of these four pension plans, please visit the relevant pension plan website at:
Media inquiries: please contact Treasury Board and Finance Communications at 780-427-5364.