Government cites challenges 'that may be contributing to increased costs and volatility, reduced pension plan coverage and hardships for retirees'
Alberta is seeking stakeholder feedback as it looks to improve its workplace pension system.
Focusing the Employment Pension Plans Act and the Employment Pension Plans Regulation, the province is seeking input on innovation and modernization, funding and reducing red tape.
“Legislation governing private sector pensions hasn't been significantly updated since 2014 and recent stakeholder feedback identified challenges that may be contributing to increased costs and volatility, reduced pension plan coverage and hardships for retirees,” says the government.
Meanwhile, since 2014, different provinces have updated their private sector pension funding rules. And because Alberta has not updated such rules, it risks further diverging from the evolution of cross-jurisdictional legislation and regulation when harmonization is often preferred.
Because of legislative and regulatory disparity, Alberta companies that have, or participate, in a defined benefit or target benefit pension plan may see Alberta as a less competitive jurisdiction, according to the government.
“Because Alberta imposes this funding requirement, it causes a competitive disadvantage due to increased costs, increased contribution volatility, and need for government to provide temporary funding relief (four times since 2008), and may overall contribute to plan closures and lack of creation of new pension plans, thus resulting in less pension plan coverage for Albertans.”
Also, rising inflation and other economic uncertainties can lead to hardships for retirees, according to the government. Previously, the Collectively Bargained Multi-Employer Plans (CBMEPs) have informed the government that the current funding rules for their plans result in funding volatility and may restrict those plans from providing cost of living increases, causing intergenerational equity concerns.
Almost one in five (18 per cent of) Canadians aged 50 and up are planning to push out their retirement date, according to a previous study from RBC.
Just 44 per cent of Canadians are confident they will have enough money to retire as planned — that’s down 10 per cent from last year, according to one study, and nearly one-quarter do not know how much savings they need to maintain their desired standard of living in retirement, according to another.
Two-thirds (67 per cent) of Canadians feel that the country is facing an emerging retirement crisis, according to another report.