July 29, 2014

The Alberta Employment Pension Plans Act (2012) Takes Effect September 1, 2014

Alberta has finally moved ahead with the modernization of its pension legislation, but not all issues have been addressed. The legislation coming into force on September 1, 2014 does not include the controversial aspects of Bills 9 and 10 that were introduced this year. Unfortunately, for trustees of Specified Multi-Employer Pension Plans (SMEPPs), this means these plans cannot yet convert previously accrued pensions into the new target benefit plan design. Consequently, the following two major concerns still exist for SMEPPs registered in Alberta:

  1. Ramifications arising from the re-introduction of solvency funding once the current moratorium expires at the end of 2014, and
  2. An inability to apply the more appropriate commuted value rules, which can only be applied to target benefit plan accruals.

For SMEPPs that were considering filing valuation reports on the effective date of the new legislation in order to adopt the new target benefit plan design, there now appears to be very little incentive to do so as the target benefit plan rules only apply to future benefit accruals. This simply adds complexity to plan design and administration without achieving any tangible benefits.

Once the Bill 9 & 10 Standing Committee hearings are completed this fall, there is a possibility Bill 10 could be passed, bringing resolution to these two issues. For multi-jurisdictional SMEPPs however, the potential application of the new target benefit plan provisions outside of Alberta and British Columbia is far from certain.

For more information, please contact Phil Rivard at 780.930.7099 or via email: privard@segalco.com.

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