In Alberta, the Finance Minister has the last word on public sector pensions. It''s time that changes.
The retirement security of 300,000 Alberta public sector workers and the approximately $50 billion assets in two pension plans, the Local Authorities Pension Plan (LAPP) and the Public Sector Pension Plan (PSPP), lie in the hands of one man.
Of course, Finance Minister Joe Ceci doesn''t personally manage pension investments - that''s the job of the Alberta Investment Management Company (AIMCo). But Ceci does have the power to direct AIMCo, and as the plan''s sole legal trustee, he can also block decisions made by the pension plans'' boards of trustees.
In other provinces, pension decisionmaking lies with trustees representing the unions and employers of public sector workers. In other words, the people who pay into the plans get to make the decisions. Makes sense, right?
Not in Alberta. Here, pension plans are at the mercy of a politician more likely to think about short-term election cycles than long-term retirement security.
The memory is still fresh for many Albertans when Doug Horner, finance minister in Alison Redford''s Progressive Conservative government, initiated sweeping changes in 2014 to public and private sector pensions. The PCs claimed the plans were in "crisis," contrary to trustees'' assessments that they were on track to eliminate unfunded liabilities arising from stock market crashes in 2000 and 2008.
In fact, those predictions came to pass, and trustees were able to lower the contribution rates for members and employers effective Jan. 1, 2018, because the plans are now in good financial health.
Having achieved this goal, the time is ripe to focus on making plan governance more accountable to those most directly affected.
Thankfully, an outpouring of opposition from pension plan members stopped the PC plan. But without changes to pension governance, Albertans may have to keep fighting defensive battles.
When the NDP campaigned in the lead up to the 2015 election, they promised to close the loop that made such political meddling possible, but so far they have made no progress toward that goal.