As part of the government’s consultations for reforming government employee pension plans, the CTF submitted the following letter to Finance Minister Doug Horner on December 30, 2013.

December 30, 2013.

Re: Reforming government employee pension plans

Dear Minister Horner,

I am writing to you on behalf of the Alberta supporters of the Canadian Taxpayers Federation (CTF) concerning your government employee pension reform consultations. The CTF holds the issue of government employee pension sustainability and fairness as a high priority. You and the government in which you serve are to be commended for addressing this issue now, while many other provincial governments in Canada – and governments across the world – have preferred to put it off until reforms will be significantly more painful to both government employees and taxpayers.

Premier Redford, the Alberta government, and all MLAs have already led by example by eliminating ‘transition allowances’ after the last election, and maintaining a relatively fair RRSP allowance. It is on the whole a marked improvement over the retirement system in place before the last election, as well the one prior to 1993, and it gives MLAs the moral license to reform retirement packages across the government more broadly.

You are no doubt aware of the unsustainability of Alberta’s defined-benefit, government employee pension regime. The CTF is calling upon the Government of Alberta to pass a ‘Government Employee Pension Sustainability Act’ that accomplishes the following:

1. Requires contribution rates from plan members to be sufficient enough to support – on an equal 50/50 basis with taxpayers – the liabilities currently held by defined-benefit pension plans; 

2. Introduces “target-benefit” provisions for existing retirees, where cost of living increases are dependent on whether the plans have unfunded liabilities or not;

3. Reduces taxpayer contributions to no more than 50% of the total contribution to any pension plan. This is currently not the case with the Management Employee Pension Plan (MEPP);
4. Ends the accrual of additional benefits under current defined-benefit pension plans in the near future;
5. Honors the government’s commitment to all benefits accrued under current plans until this time;
6. Moves all members of current defined-benefit plans to new, defined-contribution plans; and
7. Mandates that any lump-sum bailout of pension plans by taxpayers require an equal ‘extraordinary contribution’ from plan members, amortized over a reasonable period.

The CTF thanks you for addressing this issue and looks forward to working together in making government employee pension plans more sustainable for government employees and fair to taxpayers.

Truly,

Derek Fildebrandt
Alberta Director
Canadian Taxpayers Federation