Alberta bill addresses private sector pensions
BY Neil Faba, Benefits Canada | November 13, 2012
The Alberta government has introduced Bill 10, the Employment Pension Plans Act, in the provincial legislature. The bill aims to allow plan administrators to more easily develop pension plans that meet the needs of employers and employees.
The proposed act represents the first major rewrite of private sector pension laws in 25 years, and was written to take into account estimates that just one in six Albertans working in the private sector belongs to an employer-sponsored pension plan.
"The private sector has been asking for solutions that help them deal with some of the challenges associated with an employer's ability to offer pension plans," said president of Treasury Board and Minister of Finance Doug Horner.
"At the end of the day, we've been striving for more options to help Albertans be better prepared for a financially secure retirement, and this legislation is another step in that direction."
The legislation deals with matters of funding, investment, how information is disclosed to members, and member entitlement to benefits. Highlights include the following:
- harmonized pension rules between Alberta and British Columbia, which would enable the start-up and operation of pension plans by employers who operate in both provinces;
- more flexibility in pension standards, allowing private sector employers to design pension plans that meet both their needs and the needs of their employees;
- extended timelines for dealing with funding shortfalls;
- more clarity around the roles and responsibilities of those involved in managing pension plans;
- standards for target benefit plans and jointly sponsored plans;
- increased focus on disclosure, helping all parties understand the terms, risks and health of their plan, as well as their responsibilities around the plan;
- changes to qualification for vesting, from two years of plan membership to immediate; and
- locking in will no longer be based on years of service, but will be based on a minimum dollar amount that is increased annually. This would eliminate the locking in of amounts that are too small to provide a meaningful pension, and means that locking in rules keep pace with inflation.