The Employment Pension Plans Act provides more flexibility to private sector pension plans, improves their long-term stability and encourages the establishment of new plans.
The 2012 Act and regulation make it easier for private sector employers to offer or continue to offer pension plans. Toward this end, the Act and regulation establish funding rules for private sector pension plans that choose to move to a target benefit model on a go-forward basis only.
The 2012 Act and regulation are separate and distinct from what was proposed with Bill 10 in spring 2014. Unlike Bill 10, the 2012 Act and regulation do not allow private sector pension plans to retroactively convert previously accrued defined benefits to target benefits.
The Employment Pension Plans Act was passed unanimously in the Legislature and received Royal Assent in December 2012. The proclamation was delayed pending the drafting and approval of the accompanying Employment Pension Plan Regulation. With the regulation passed by Cabinet on July 22, the Act can now become law.
“Private sector plan sponsors such as employers and unions have expressed concern about the long-term viability of their plans and have demanded more flexibility. To further delay proclaiming this Act and its regulation would be irresponsible to the many organizations across Alberta who are eagerly awaiting it.”
~ Doug Horner, President of Treasury Board and Minister of Finance
“The new legislation has been anxiously awaited and is a welcome development for plan sponsors and members in Alberta. Attractive features of the legislation include its promotion of innovation in plan design, more flexible funding rules and reduced administrative complexity.”
~ Chris Brown, former Alberta chair of the Joint Expert Panel on Pension Standards and Partner at Blake, Cassels & Graydon LLP
The Employment Pension Plans Act 2012 makes offering pension plans for private sector employers easier in several ways:
- It harmonizes Alberta and British Columbia pension rules, making it easier for pension plans to both start up and operate effectively for their members.
- It offers more flexibility, making it easier for private sector employers to design pension plans for the changing work force.
- It opens the regulatory system to the different types of pension plans that exist now and may be considered in the future.
Key items in the new regulation provide for:
- more flexible rules for the establishment of different types of plans and discussion on new ideas for plan rules on how to fund target benefit plans;
- rules for unlocking of benefits for circumstances noted in the Act;
- new disclosure rules that have been revised to be more plan type specific and expanded to provide information to more interested parties;
- clarification of the roles and functions of the administrator, fund holder and participating employers;
- some specific rules related to the establishment and maintenance of funding and governance policies; and
- rules for enforcement, including limits on fees and penalties and establishment of the Alberta Pension Tribunal.
Under the Building Alberta Plan, our government is investing in families and communities, living within our means, and opening new markets for Alberta’s resources to ensure we’re able to fund the services Albertans told us matter most to them. We will continue to deliver the responsible change Albertans voted for.