The night before announcing his retirement as Alberta’s NDP leader, Brian Mason told Athabascans two bills before the legislature threaten pensions not only for public sector employees, but private sector employees as well.
“It shows to me that the government is backing away from its responsibility,” Mason told 25 or so people assembled at the train station for an NDP town hall on proposed pension changes in Bill 9 and Bill 10.
Bill 9, if passed, would affect public employees’ pensions by increasing the penalties for early retirement, capping contributions and reducing the guaranteed cost of living allowance, Mason said.
“All of those things mean that the pensions will be somewhat less, and you’ll have to work longer to get it,” said Mason.
Bill 10, said Mason, would allow private businesses to convert existing defined benefit pension plans to target benefit plans.
“That means that everyone’s pension in the province is vulnerable,” he said.
Defined benefit pension plans pay a set benefit to members on retirement based on how much that member has earned, length of service and age. With target benefit plans, the benefit is not guaranteed; a goal is set, but whether it is met or not depends on the financial performance of the plan.
However, Jessica Jacobs-Mino, press secretary to Alberta Finance Minister Doug Horner, said in an interview with the Advocate that there’s an important caveat in Bill 10: the employers have to get the consent of their plan members before they can switch from a defined benefit to a target benefit plan.
“Plan members would be motivated to do that based on indications from their employer that the plans … aren’t sustainable anymore. But (employers) would have to make that argument to their employees,” said Jacobs-Mino.
She acknowledged Bill 10 does not define what percentage of employees would have to agree to changes — and that ambiguity worries Mason.
“Now the minister is saying pass it first, then we’ll negotiate the fine points,” said Mason.
As for the public sector changes proposed in Bill 9, Jacobs-Mino stressed that they are to “ancillary benefits,” while the core of the plan remains the same. No benefits accrued up to the end of 2015 will be affected, she added.
“The longer you work, the bigger your pension is, and that remains unchanged,” said Jacobs-Mino. “Nothing we’re doing is retroactive. It would have absolutely zero impact on current retirees.”
She said the changes are necessary because demographics are shifting.
“We’re in a position where we have a lot more people retiring, and everyone’s living for longer,” said Jacobs-Mino. “When these plans were developed, people would retire, and then, frankly, not live for that many years after they were retired.”
In some cases, people are drawing on the pension for longer than they paid into it, she said.
As for the changes to early retirement formula, she said, “If you wait until you’re 65 to retire, you won’t see any impact on that front at all.”
The guaranteed cost of living adjustment is currently 60 per cent of inflation; Bill 9, Jacobs conceded, would turn that into a “targeted cost of living adjustment.” If the plan can afford it, a target amount of inflation insulation is paid out. If the plan can’t afford to pay in a year of poor financial performance, it won’t pay.
Jacobs said in good years, pensioners could be paid that allowance retroactively.
She pointed to a current unfunded liability in public sector pensions of $7.4 billion as proof the existing model is unsustainable. She acknowledged there is a plan in place to pay that down within 10–12 years, but said, “What it isn’t guarding against is future accrued unfunded liabilities.”
Mason expressed more confidence in the current model, saying, “Our position has been that the pension boards have the situation in hand.”
He said the plans will come back into balance without government interference. And if the government wants to introduce changes, those changes should be negotiated with the affected unions, he added.
Mason noted the NDP have a petition online that they will table in the legislature and said that in cooperation with other opposition parties, they have managed to slow down the passing of Bill 9.
His concern is that the government is insulating itself should some currently public sectors be privatized in the future, leaving not enough employees paying into pension plans to support those plans.
There are currently approximately 200,000 Albertans enrolled in four public sector pension plans and a further 120,000 retirees drawing on those plans.
Neither local MLA Jeff Johnson’s office nor Jacobs could estimate how many public sector employees in the Athabasca region stand to be affected by Bill 9, which, if passed, would come into effect Jan. 1, 2016.
Gloria Rein, membership services officer for Athabasca with the Alberta Union of Provincial Employees (AUPE) Local 069, said as of February, the Athabasca University-based local has 259 members, most of whom live in Athabasca. AUPE members have two types of defined benefit plans with the province. She added that there are other union members working in health care, government and primary services in Athabasca.
“AUPE members are very concerned about these changes,” said Rein, adding that hundreds of letters have been sent to MLAs and that many members have tried to meet individually with their MLAs.
After all, as one attendee pointed out at Mason’s talk, “It’s also my money we’re talking about.” She has been paying into a plan and expecting specific types of benefits.
Another audience member stated that these pensions free up more Canadian Pension Plan funds for others.
Federal NDP candidate for the upcoming Fort McMurray-Athabasca byelection Lori McDaniel was also at the town hall.
“We gained a lot years ago through fighting; then we got lazy,” said McDaniel, adding that the rights of the working class will continue to be chipped away unless resistance is mobilized.
Mandy Melnyk, who ran as the local NDP candidate in the last provincial election, said it’s important people understand this is not a union issue.
“This issue is far bigger than unions. The issue will affect every Albertan and every Canadian. It’s an open book for private sectors as well as governments to renege on their responsibilities and play poker with people’s hard-earned money that they’ve invested in pension plans,” said Melnyk.
She said the greatest mistake people can make is to think this has nothing to do with them.
“People should not think that it’s not going to affect them, because the minute a large segment of society is struggling, it costs everybody.”
