Alberta announces changes to public-sector pensions

Public-sector workers will have to work longer before being able to retire on an unreduced pension under proposed changes.

Province will modify, but not scrap, early retirement rules for public sector

Alberta Finance Minister Doug Horner announced Monday some of the changes he intends to make to public-sector pensions. (CBC)

Public-sector workers will have to work longer before being able to retire on an unreduced pension under proposed changes.

The province announced Monday some of the changes it intends to make to public sector pensions.

"While life expectancies have increased over the past several decades, the age of retirement has not," Finance Minister Doug Horner said in a release. 

"Today, some Albertans will spend more of their lives retired than they spend in the workforce. This has a significant impact on pension plans, not just in Alberta, but across the country.

Horner says the province faces an unfunded liability of $7.4 billion and must tighten the plans to keep costs from spiralling.

Benefits to current retirees will not change, nor will core benefits, Horner said. 

However changes will be made to "add-on" benefits such as early retirement subsidies and cost of living adjustments, he said.

Legislation to be introduced next month will change that to age 60 with 30 years of service for people who begin working for the government in 2016.

It's a step back from earlier proposals which would have ended early retirement subsidies altogether, which currently allow staffers aged 55 or older with at least 30 years of service to leave with full benefits.

"This came from the feed back we got, from a number of plan sponsors and employees, that said having an early retirement option built into the plans is something that is a good competitive nature for attracting new staff and keeping staff," Horner said.

Changes will also be made to cost-of-living adjustments for pension benefits earned after 2015.

While the adjustment will remain at 60 per cent of the Alberta inflation rate it will become a target instead of a guarantee, allowing for flexibility in managing the plans, he said.

Reform heavy handed, union says

The changes would take effect on Jan. 1, 2016, and would not affect current retirees.​

But the opposition Wildrose party said the reforms should only apply to future hires, not those already employed. 

"This is how the Saskatchewan government negotiated reforms in the 1970s and it is the best way to respect taxpayers and workers, both now and into the future," said finance critic Rob Anderson. 

Union leadership expressed disappointment the changes were not negotiated and will be imposed unilaterally.

“One of our biggest concerns now is the same that was raised by the Auditor General: that employees may leave the public service because of these changes," said Guy Smith, president of the Alberta Union of Provincial Employees.

"If that happens, it will not only harm the quality of services, but could create a run on the pension plan, significantly increasing the unfunded liability."

The changes will affect 300,000 provincial workers.

With files from The Canadian Press