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Alberta Has To Scrap The LAPP

The pension plan for thousands of municipal employees is costing taxpayers a fortune each year.

10/16/2017 17:32 EDT | Updated 10/16/2017 17:36 EDT
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A general view of Edmonton's city hall on Canada Day 2016.

If you want to save on your property tax bill, why not ask municipal election candidates "will you scrap the LAPP?"

The LAPP is the Local Authorities Pension Plan and it is provided to thousands of municipal employees across Alberta. The problem is, it's costing taxpayers a fortune each year.

According to the LAPP's 2016 annual report, there are 417 organizations that are enrolled in the pension plan, primarily consisting of municipal governments, school boards and health organizations.

Municipalities enrolled in the plan range from small towns like Cardston and Eckville to large cities like Calgary and Edmonton.

Back in 2007, Alberta taxpayers had to pay $476 million for the costly benefits provided to government employees enrolled in the plan. But due to the plan's financial problems, by 2016, the annual bill for taxpayers had skyrocketed to approximately $1.3 billion, a 179-per-cent increase in just 10 years.

What happens if we see another escalation of costs over the next decade? Are taxpayers supposed to just keep shovelling more and more money into the golden plan each year?

Has your paycheque gone up 179 per cent over the past decade? Have your workplace benefits increased by 179 per cent? If not, why vote for a politician who thinks it's reasonable for taxpayers to have to pay 179 per cent more for government employee benefits?

Again, we're not talking about a one-time $1.3-billion expenditure. That figure is the annual cost for Alberta taxpayers for this one pension alone. If you divide that figure by the number of current employees enrolled in the pension plan, it works out to about $8,240 per employee each year.

Is your employer contributing $8,000 towards your retirement each year?

Considering most Albertans working outside the government don't have a workplace pension plan, it's probably fair to say most readers probably can't relate to such a golden benefit.

Defenders of the plan will have all kinds of excuses for leaving the plan alone.

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LAPP benefits are administered by Alberta Pension Services, which is located in Edmonton.

But maintaining the status quo is not only costly, it's also quite risky. What happens if we see another escalation of costs over the next decade? Are taxpayers supposed to just keep shovelling more and more money into the golden plan each year?

It's also important to note the plan isn't fair for many new employees. You see, in order to keep the plan afloat, the LAPP has been increasing the contribution rates for current employees. As a result, some of their contributions are being used to ensure the fund has the resources to make payments to former employees. Those close to retirement may not mind paying a higher amount for a couple years, but if you've just started working for the government, the situation is anything but fair.

Scrapping the LAPP will not be easy, but Saskatchewan has shown it can be done. In the 1970s, their province's NDP government began putting new employees in a far less costly pension plan, much like an RRSP, known as a defined contribution plan. Thus, over time, many of Saskatchewan's pension problems have slowly been addressed.

So the question is, do Alberta politicians have the steely resolve necessary to stand up for taxpayers and tackle this golden entitlement problem? Try asking your local candidates: "Will you scrap the LAPP?"

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