EDMONTON - Alberta Finance Minister Doug Horner said Monday he has decided not to scrap early retirement incentives for public sector workers after all.
Horner said the province will instead amend the formula to keep the early retirement plans attractive to workers while still being cost effective for the government.
"This is considerably less of a change than we had originally intended back in 2012, and more moderate than what we presented in September," Horner told reporters in a legislature news conference.
"This came from the feedback that we got from a number of plan sponsors and employees, who said having an early retirement option built into the plans is something that is good for hiring and attracting staff."
Right now, staffers aged 55 with at least 30 years of service can retire with full benefits.
Legislation to be introduced in next month's spring sitting will change that base figure to age 60 with 30 years of service for people who begin working for the government in 2016.
The early retirement provision is one of a number of changes proposed in recent months by Horner to deal with an unfunded pension liability of $7.4 billion.
"The changes we're doing now is to stop the bleeding," said Horner.
"It means (the unfunded liability) is going to stop growing, and that was the target."
He said the unfunded liability will still take decades to pay off.
Alberta's public sector pension, spread over four plans, has 200,000 active members and 120,000 retirees.
Horner stressed benefits accrued through 2015 will still be honoured. The changes will kick in starting in 2016.
Among the other changes, the plans will be jointly sponsored and managed.
Funding will be split 50-50 between employees and employers, and new rules would give both sides more room to manoeuvre to keep the plans out of the red.
Cost of living adjustments, for example, will still be guaranteed at 60 per cent through 2015 but afterward the 60 per cent will become a target.
Horner said replacing that guarantee with a target is critical to give the pension managers flexibility to keep the plan viable.
Labour groups say the changes don't address key concerns, such as the erosion of benefits through inflation, and the fact the government still has the whip hand by capping contribution rates.
"We intend to continue to pressure the minister on this (contribution rate) issue, as it has the potential to reduce benefits not only for future members, but current pensioners," said Guy Smith, president of the Alberta Union of Provincial Employees, in a news release.
Earlier Monday, the Alberta Federation of Labour and other worker groups held a mock negotiating session in bitterly cold temperatures outside Government House, where Horner was meeting with pension trustees.
They said it was symbolic protest against a government that has refused to include workers in the pension reform process.
“The frigid temperatures are appropriate because the minister and the government have really left public sector workers and retirees out in the cold,” said Heather Smith, president of the United Nurses of Alberta.