Government takes initial step to address teachers' portion of unfunded pension liability
Edmonton... The government has submitted a letter to the Alberta Teachers' Association (ATA) to commence discussions on seeking a fair, final and lasting solution to the teachers' portion of the pre-1992 unfunded pension liability.
"The pension liability issue is not a new problem, it has been around for many decades," said Education Minister Ron Liepert. "However, it has become evident that pension contributions needed to pay for a pre-1992 liability may be an obstacle in the recruitment of the brightest students and retention of the best teachers to our classrooms."
Since it was established in the late 1930s, the teachers' pension fund has been underfunded by its two primary sponsors - the ATA and the provincial government. In 1992, the Government of Alberta accepted responsibility for two-thirds of the liability (now $4.3 billion), while teachers accepted responsibility for one-third (now $2.1 billion).
In accordance with the 1992 agreement, in 2007 government will contribute over $357 million — $200 million, or 8.39 per cent of teachers' salaries, for current service pension payments plus an additional $157 million, or 6.38 per cent of teachers' salary, for the unfunded pension liability. As of September 1, 2007, 3.1 per cent of a teacher's salary will go towards this liability.
The Minister added, "Currently 60 per cent of our teachers were not teaching prior to 1992 and a significant number of teachers are retiring which means more and more new teachers will pay for the old liability. We need to find a fiscally responsible solution which provides value to Alberta students, teachers, and taxpayers."
The Government of Alberta has submitted a letter to the ATA to seek a solution to this issue. The letter has two components.
- a Task Force which will research and consider options to address the teachers' share of the unfunded pre-1992 pension liability; and
- as a sign of good faith, the Government of Alberta will assume, for one year:
- 100 per cent of contributions for teachers with 1-5 years of experience (approximately $1,400 on a salary of $50,000 annually).
- 75 per cent of contributions for teachers with 6-10 years of experience (approximately $1,300 on a salary of $60,000 annually).
- 50 per cent contributions for teachers with 11-15 years of experience (approximately $1,200 on a salary of $75,000 annually).
- 25 per cent contributions for teachers with 16-20 years of experience (approximately $650 on a salary of $80,000 annually).
