A report by Alberta’s auditor general finds that, while public sector pension plan boards have implemented risk management systems, there’s no clear responsibility for co-ordinating and managing risk.
It recommends that the province’s finance department establish a public sector pension plan risk management system “to support the minister in fulfilling his responsibilities for Alberta’s public sector pension plans.”
Finance Minister Doug Horner says the focus over the next two years will be on implementing pension reform changes, including the transition from government sponsorship to joint sponsorship by employers and employees under a particular plan. “A new risk management system will form part of this process.”
The report also notes that, since 2000, there were 10 different finance ministers who had responsibilities to deal with other than just the province’s public sector pension system.
“In this complex system with multiple stakeholders, the lack of continuity in this leadership role poses a significant risk in the ability of the system to respond to adverse experience in a timely manner,” states the report. “A system to establish consensus for when and how to implement change without continuity in leadership is necessary to make the plans sustainable.”
At the end of December 2012, Alberta’s four major pension plans—the Local Authorities Pension Plan, Management Employees Pension Plan, Public Service Pension Plan and Special Forces Pension Plan—had unfunded liabilities that totalled $7.4 billion.
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