You and your pension
Bill 25: Legislative changes made to teachers’ pension plan
Sandra Marcellus, ATA Staff Officer, Teacher Welfare
In November 2007, the Alberta Teachers’ Association and the government of Alberta reached a memorandum of agreement on the disposition of the pre-1992 unfunded liability (UFL) of the Teachers’ Pension Plan (the Plan). This agreement replaced the 1992 UFL agreement.
The 2007 agreement commits the government to make all contributions needed to fund the pre-1992 UFL from January 2008 to August 2009. Prior to this agreement, teachers paid one-third (3.1 per cent of salary) and the government paid two-thirds (6.2 per cent of salary) of the UFL contributions. The agreement stipulates that as of September 1, 2009, the fund would be split into pre-1992 and post-1992 portions. The post-1992 portion will be fully funded by contributions from the government and teachers, and administrated by the Alberta Teachers’ Retirement Fund (ATRF). Contributions will be the amount needed to fund teachers’ pensions as they are earned. Deficiencies in the fund must be made up by extra contributions, so that the deficiency is made up within 15 years.
Pensionable service earned by teachers prior to 1992 will be funded solely by the government. Pensions will also be administered by ATRF, and pensioners will notice no difference in their pensions. The government will pay these pensions on a pay-as-you-go basis—rather than set money aside to pay future pensions for teachers, the government will pay out pensions as teachers collect them. This means the government is paying more money into teachers’ pensions now than it would have under the 1992 agreement. The 1992 agreement, however, would have meant that the government and teachers would have paid into the pre-1992 UFL until 2060 and, over that time, put in more money than it will now cost the government to pay the teachers’ pre-1992 pensions.
The Plan is contained in the Teachers’ Pension Plan Act, which required amending to put the November 2007 agreement into effect. In the spring 2008 session of the legislature, Bill 12 cleared the way for the government taking over all contributions to the pre-1992 UFL. Bill 25 includes legislative changes to put the new funding structure and splitting of the fund into effect.
Bill 25 was tabled on March 9, 2009, by Iris Evans, minister of finance and enterprise.
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