The Canadian Federation of Pensioners is taking issue with some of the Alberta government’s proposed legislative and policy updates for private sector pension laws, including a focus on transferring pension risk from plan sponsors to plan members.
In its response to the provincial regulator’s consultation draft, the CFP said transferring this risk would be a significant change and expressed concern these changes could take place without the consent of plan members or any meaningful risk mitigation on their behalf. “There are no provision or proposals to require the informed consent of individual plan members to these changes that represent a real increased risk to their future financial well-being. This does not meet the stated goal of ‘effective, fair and in the interests of Albertans.’”
Read: Alberta seeking feedback on private sector pension legislation
The CFP is also concerned with proposals to reduce the 100 per cent solvency funding target or eliminate solvency requirements entirely, unless the increased risk to pension plan members is fully mitigated. It also noted the main proposed option permanently provides solvency relief to all defined benefit pension plans without ascertaining whether they need the relief and without giving plan beneficiaries any say in the matter.
“The latest data is that private pensions in Alberta are very well funded, with an average funded ratio of 112.56 per cent and an average solvency ratio of 93.4 per cent,” said the letter. “CFP suggests that rather than reducing solvency requirements, now is the time to focus on maintaining the current funding ratios with a focus on risk management.”
The letter also alleged the proposed legislative updates prematurely conclude there’s an urgent liquidity problem to be solved, which the CFP said it sees no evidence of in Canada, nor in Alberta.
Read: PIAC providing feedback on potential updates to Alberta’s private sector pension legislation