Proposed plan features automatic enrolment
“The establishment of an occupational pension plan available to all Alberta and British Columbia workers would be well received by employers and employees alike and should significantly address the issue of how to increase pension plan coverage for the private sector in our two provinces,” states the report, adding “individual employers would not have any fiduciary responsibility.”
Small- to medium-sized employers might consider this an appealing option to offer employees, said Brenda Prysko, a Calgary-based principal with HR consulting firm Mercer, though it’s not yet clear how a double opt-out feature would be enforced unless it is made into a statutory obligation.
Calling the report “a frustrating mixture of the positive and negative,” the National Union of Public and General Employees (NUPGE) voiced several concerns about the proposal, including the opt-out option of the ABC plan.
“In practice, that would surely mean that the employer — in any non-union environment — would make the decision,” said Larry Brown, national secretary-treasurer of NUPGE.
Improving coverage has been very much an integral part of this review, said Scott Perkin, Toronto-based president of the Association of Canadian Pension Management. “There are some features (to the ABC plan) that make sense, such as administration by an arms-length agency with an expert board of governors.”
The spirit of co-operation continues with the panel’s recommendation that the acts covering pensions for both provinces be identical. The establishment of a joint advisory council, joint pension tribunal and joint pension regulator is also proposed in the report.
“Inconsistent laws, overlapping powers and uneven administration of similar laws cause frustration and create unnecessary delay for pension plans with members working in more than one jurisdiction,” states Getting Our Acts Together. “In the context of multi-jurisdictional pension plans, harmonization of pension standards is seen as supporting labour mobility, simplifying disclosure and reducing administrative costs for plan sponsors.”
But a fully merged pension system is a concern for NUPGE.
“Neither province will be able to establish progressive new policies without the support of the other. The most likely result is the prevention of new moves forward in pensions in either province,” said Brown. “The problem will not be solved by defined contribution, money accumulation plans, and the problem needs to be addressed nationally to really resolve the issue.”
The Alberta-B.C. report does state the two governments should work toward national harmonization by championing the establishment of a national council of ministers responsible for pensions. The existence of three legislative review bodies in the country — the Ontario Expert Commission on Pensions, the Nova Scotia Pension Review Panel and Alberta and B.C. — at the same time signals the modernization of pension standards is on the national agenda, said the panel.
It also urges the joint creation of a “pension advocate” responsible for the promotion of pension coverage, similar to the “pension champion” advocated by Ontario. The regulator is there to enforce minimum standards and compliance and shouldn’t be communicating with the industry on policy issues and advising the government on changes, said Perkin.
“There seemed to be a conflict between that policy role and the strict compliance role,” he said. “That’s an attempt to make the industry more responsive to changes as they occur.”
However, the pension advocate could translate to more bureaucracy and additional costs, “particularly in the current economic environment — is there going to be an appetite for adding more layers to the process, and hence more costs?” said Caroline Helbronner, Toronto-based partner with the law firm Blakes.
