The legislature's member services committee rejected Tuesday a proposal for defined benefit pension, described by taxpayer's groups as a gold-plated plan.
Instead, MLAs set up a committee to look at either a defined contribution plan, which is similar to an RRSP, or a targeted benefit plan.
The targeted plan is a new type of pension that spells out benefits, but would allow the government to adjust payments to retired MLAs if the economy takes a dive.
While Tory MLAs supported the scheme, Alberta Wildrose Leader Danielle Smith opposed the targeted pension, saying it was still too rich for taxpayers.
Alberta Liberal leader Raj Sherman walked out of the meeting after the committee rejected a motion to have an independent review set up the pension plan.
MLAs on the committee are expected to vote on which pension scheme they want in late September, and then sent it to the full legislature for approval.