On October 25, 2012, the Alberta government introduced Bill 10, Employment Pension Plans Act for first reading in the Alberta Legislature. Bill 10 is the first major rewrite of Alberta’s current Employment Pension Plans Act (the Act). Bill 10 is intended (i) to provide more flexibility as employers and other plan sponsors look for alternative ways to manage their pension plans, and (ii) to ensure that the pension benefits promised under these plans can be delivered. The legislation is a result of the work done by a joint expert panel assembled by the governments of British Columbia and Alberta to look into ways to modernize and harmonize the pension standards legislation in the two provinces.
Some of the highlights of Bill 10 include the following:
- harmonization of the pension rules of private sector pension plans in Alberta and British Columbia;
- extended timelines for funding deficiencies;
- increased flexibility in pension standards;
- possible revision of benefit amounts in a target benefit plan if funding difficulties arise, subject to specific funding rules;
- jointly sponsored pension plan members now to share the total cost of the plan, as opposed to contributing only toward their own benefits;
- increased disclosure to members about the terms and risks of the plan;
- vesting requirements changing from two years to immediate; and
- provisions on locking in no longer based on years of service but on a minimum dollar amount, which will be increased annually.
In its news release, the Alberta government stated that Bill 10 "reflects [employers’] need to have more flexibility in how they design pension plans and to share risk in different ways, and helps remove barriers that may have kept many employers from offering pension plans to their employees." Bill 10 takes a more principle-based approach to pension regulation than the current Act, and will be heavily reliant on regulations, which are expected to be released later in 2013.