Message from the LAPP Board Chair Terry Agoto - March 24, 2015

In January, Alberta Finance Minister Robin Campbell called together members of the LAPP Board and other pension Boards to "wipe the slate clean" on pension reform and start afresh with a more collaborative process that would allow each plan to travel its own road and do so with its own stakeholders.

The Minister indicated he favored an approach to pension reform that was the result of employer and employee representatives working together to determine the best way to ensure the plans are well governed and sustainable, with the interests of all stakeholders balanced.

The new process will see stakeholders working together on a new governance model that will give employers and employees who pay for the plan the right to make decisions about the costs and benefits of LAPP. Collaboration would also include agreeing to a Funding and Benefits Policy to set out the guidelines for how costs and benefits will be managed in the future.

"My position is that employee and employer sponsors for each of the plans will be empowered to determine the pension deal," said the Minister. "That deal is decided by them, based on what's best for them."

The LAPP Board welcomes this fresh approach to pension sustainability because, as we have shared with you many times, best practice and experience across this country dictate that those who bear the risks should govern the plan. It is the employers and members of LAPP who secure the pension fund with their contributions and they should determine the pension deal.

In the last round of pension sustainability discussions, the government announced it would legislate benefit changes for Alberta public sector plans that would take effect January 1, 2016. However, the proposed legislation and intended benefit changes were withdrawn by new Premier Jim Prentice, in favour of increased consultation with members and employers to ensure the pension plans are "competitive" and "sustainable".

At the January meeting, the Minister also advised that while discussions are taking place between employer and employee representatives for each plan, it will be up to the Plan Boards to assess and report on any risks to the plans. To that end, he asked the boards to provide a report to him within 30 days, identifying risks and strategies proposed for dealing with them.

Some LAPP stakeholders have interpreted the Minister's request as expecting our Board to suggest changes to Plan benefits in our report. The Board does not believe that was the Minister's intent, nor did the Board take it that way. We did submit a report to the Minister as he requested and I can confirm that we did not recommend any changes to plan benefits as part of our report. Rather, the Board set out the strategy it intends to follow while the sponsor process is ongoing, to address risks facing the Plan over the short, medium and long term. A summary of our report can be found at this link: Summary of February 2015 Report to Minister

As we have communicated to you since 2011 when the Board began its sustainability planning process, there are a number of significant risks that face our pension plan. These risks are no different than those facing other defined benefit plans across the country and around the world, and we continue to assess them and respond accordingly.

We work with our expert staff and professional consultants to devise funding and investment strategies to mitigate these risks on an ongoing basis. We will continue to keep LAPP strong and healthy while our stakeholders, in their important role as Plan sponsors, come to an agreement on the pension plan they want going forward.

To read more about our meeting with the Minister and the new process he has launched for pension discussions in Alberta please read: A New Approach to Pension Renewal

Please keep checking back to the website for news and updates. We want to keep you fully informed throughout the process.

Terry Agoto,
LAPP Board Chair