Pensions are an important benefit offered by LAPP employers as part of overall employee compensation. It is important to members, who also pay every month towards their future retirement, that LAPP is well governed, now and into the future.
For many years, LAPP employee and employer representatives have told government they want more say in how their pension plan is managed.
Bill 27, the Joint Governance of Public Sector Pension Plans Act, will transition LAPP and other public sector Plans to a joint governance structure.
The Bill, which received third reading in the legislature Tuesday, December 4, will take effect in the fall of 2018. The anticipated transition date is March 1, 2019.
In the past, government made the final determination on changes to LAPP, including pension benefits. Under joint governance, this will no longer be the case.
Instead, employee and employer groups will share control of Plan design and responsibility for the financial health of the Plan. Benefits provided under the Plan will be subject to discussion and agreement between employee and employer sponsors without government having the final say.
Employee and employer sponsors continue to share responsibility for the risks associated with funding LAPP, a defined benefit Plan, including the risk of investment losses that may necessitate changes to contribution rates and/or benefits.
LAPP will continue, with no changes to benefits or how the Plan is funded—only the governance structure will change as a result of the transition.
Under the new joint governance structure, future Plan changes will be determined by the sponsor board, not government.
Retired member benefits will not be impacted in any way, and the sponsor board is required to consider the interests of retired Plan members before making decisions.