WHEREAS the Local Authorities Pension Plan (LAPP) is a contributory defined pension plan for employees of local authorities in Alberta, Canada, which includes health authorities, cities, towns, villages, municipal districts, counties, colleges, school boards and many other public sector organizations;AND WHEREAS the provincial government legally severed all of its financial obligations to the Plan in 1999, and since then, the Plans employers and members have been solely responsible for the Plans financial well-being;AND WHEREAS although the LAPP is responsible for the Plan and can set investment policy, the Local Authorities Pension Plan is required to have all of its investments managed and determined by Alberta Revenue, Alberta Revenue Investment Management (ARIM);AND WHEREAS effective January 1, 2004, both employer and employee contribution rates have increased by 1.077%, which in effect is a 20% increase in contribution rates, as investment returns have declined due to market performance;
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request that the Government of Alberta give the Local Authorities Pension Plan Board of Trustees more flexibility in its choice of investment managers.
The Local Authorities Pension Plan has written the Minister of Finance on more than one occasion to express its concerns about investment performance. Alberta Revenue Investment Management manage about $38 billion in investments, about $9 billion being the Local Authorities Pension Plan fund. According to the Local Authorities Pension Plan, other similar pension plans in Canada have an opportunity to invest funds in the manner it wants. The long-term plan of the Local Authorities Pension Plan is to earn 7% on its investments for sustainability of the Plan. The Local Authorities Plan Board (LAPP Board) member and employer contribution rates have increased by 1.077% each on January 1, 2004. The impact of the increase for LAPP members and employers, as a percentage of pensionable salary, is shown below.Members Current Rate 4.525% up to YMPE* 6.4% over YMPEMembers’ Rate January 2004 5.602% up to YMPE 7.477% over YMPEEmployers’ Current Rate 5.525 up to YMPE 7.4% over YMPEEmployers’ Rate January 2004 6.602% up to YMPE 8.477% over YMPE*YMPE refers to the Year’s Maximum Pensionable Earnings level determined by the Canada Pension Plan. In 2003, the YMPE was $39,900.This represents a 20% increase in contribution rates.
Resolution 15-99S, endorsed at the Spring 1999 Convention, advises the provincial government of rural municipal support for the independence of LAPP, based on joint trusteeship between employer and employee and joint responsibility for unfunded liability, flexibility regarding part-time employees and release of indemnity for the provincial government for possible shortfalls within LAPP.The AAMDC has had a long history of involvement with LAPP, through AAMDC board member participation on the LAPP board.