Government workers in Alberta will see major changes to their pensions in the coming years, with employees working longer and contributing more to their pensions Finance Minister Doug Horner announced Monday morning.
The proposals come after more than a year of consultation, Horner said.
Current pensioners won't be affected but public sector employees whose retirement dates are after 2015 will be.
Horner said the province is facing billions of dollars in unfunded liabilities that can't be realistically fixed through investment returns.
While he said there is no crisis yet, Horner pointed to Alberta's aging population, more employees electing to retire early and fewer contributors making it difficult to sustain pension plans in the long run.
Horner said pension plans are not bringing in the high returns compared to two decades ago.
"You have more people retired than are contributing to some of the plans – that, just on the surface – will tell you it's not sustainable unless you hike the contribution rates for our employees so high to maintain and subsidize those that have retired. "
Horner said one of the proposed changes is moving away from early retirement incentives for public sector workers. The province also wants to eliminate the automatic Cost of Living Allowance.
Horner made the announcement after meeting with four public sector unions this morning.
Worries over new pension plan
Public sector union leaders say they are concerned about the Alberta government's plan to curb pension benefits.
They said the changes would mean members, including those belonging to the Alberta Union of Provincial Employees (AUPE), United Nurses of Alberta, Health Sciences Association of Alberta and the Canadian Union of Public Employees, would have to work longer to retire with reduced benefits.
AUPE leader Guy Smith said he intends to fight the changes, which he calls “unacceptable.”
NDP leader Brian Mason also spoke about the pension changes.
“This is a weakening of the public pension plans, and it’s not justifiable,” he said. “Public pension plans are in fine shape in Alberta and they are well on their way to being fully funded.”
“What’s needed is to extend public pension plans to the millions of workers in Alberta and across Canada who do not have plans – the real crisis is there are far too many Albertans and Canadians who don’t have access to a decent pension.”
The public sector unions have until the end of December to submit their own recommendations to the province.