It's a bill opponents and unions say is unfair, unnecessary, and could result in sharply reduced benefits.
Intergovernmental Affairs Minister Cal Dallas introduced Bill 9 on behalf of Finance Minister Doug Horner, and it quickly passed first reading.
"The proposed changes in the bill strike the right balance between all stakeholders," Dallas told the legislature.
"By acting now with some modest course corrections we avoid leaving future generations of plan members and taxpayers with significant problems."
Horner was not in the legislature — he was representing Alberta at the funeral of former federal finance minister Jim Flaherty.
Horner has said the changes, to kick in starting in 2016, are needed to keep the plans viable and to overcome more than $7 billion in unfunded liability.
However, unions and opposition leaders say the plans are already on track to solve the unfunded liability.
They say the proposed Public Sector Pension Plans Amendment Act will allow the government to needlessly scale back the benefits and penalize anyone who wants to retire early.
"It's an unnecessary attack on the pension rights of public employees," said NDP Leader Brian Mason.
"(With the changes) it may well mean that the pension administration will not be able to get through the next recession without seriously reducing benefits."
Liberal house leader Laurie Blakeman agreed, calling the bill "an attack on working people."
Wildrose finance critic Rob Anderson said any changes need to be negotiated with the unions and then only apply only to new hires.
Gil McGowan of the Alberta Federation of Labour said they are embarking on an ad and letter writing campaign, and will hold rallies to let the government know it is passing a punitive and unnecessary amendment.
"This is sort of the end game. This is the crunch time," said McGowan.
The main changes revolve around inflation proofing, a cap on contributions, and early retirement rules.
Right now pensions are guaranteed to 60 per cent of the rate of inflation. That guarantee will be a target instead of a requirement starting in 2016.
There will be a cap on contributions by employers and employees. Once the cap is reached, other options need to be considered to keep the plans viable. Critics say that means reduced benefits.
Right now, staffers aged 55 with at least 30 years of service can retire with full benefits. Under the changes, it will be age 60 with 30 years of service for people who begin working for the government in 2016.
For those who retire early, there will be a five per cent reduction in pension for each year. The current penalty is three per cent.
Employers and employees will share the costs 50-50, but no benefit improvements will be allowed until 2021.
Horner has stressed benefits accrued through 2015 will still be honoured.
Alberta's public sector pension, spread over four plans, has 200,000 active members and 120,000 retirees.
Also Wednesday, Dallas introduced Bill 10, the Employment Pension Plans Amendment Act.
The bill will allow private sector pension plan operators to convert previously accrued defined benefits into targeted benefits.
"By allowing these proposed changes we will be helping private employers address some of their challenges they are facing, including pension plans that are too costly to maintain," said Dallas.
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